The First Industrial Revolution

THE
FIRST INDUSTRIAL
REVOLUTION
THE
FIRST INDUSTRIAL
REVOLUTION
PHYLLIS DEANE
PROFESSOR OF ECONOMIC HISTORY IN THE UNIVERSITY OF CAMBRIDGE
AND FELLOW OF NEWNHAM COLLEGE
SECOND EDITION
CAMBRIDGE
UNIVERSITY PRESS
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© Cambridge University Press 1965, 1979

This book is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.
First published 1965

Second edition 1979
Reprinted 1982, 1983, 1984, 1986,1987, 1988,1990, 1992, 1998, 2000
British Library Cataloguing in Publication data

Deane, Phyllis.
The first industrial revolution.
Bibliography
Includes indexes.
1. Great Britain—Industries. 2. Great Britain—
Economic conditions—1760-1860.1. Title.
HC254.5.D3 1979 338'.O94i 78-26388
ISBN o 521 22667 8 hard covers

ISBN o 521 29609 9 paperback
(First edition ISBN O 521 04802 8 hard covers
ISBN o 521 09863 5 paperback)
Transferred to digital printing 2003

CONTENTS
Preface to the first edition page vii

Preface to the second edition ix
I The starting-point
2 The demographic revolution 20
3 The agricultural revolution 37

4 The commercial revolution 53
5 The transport revolution 72
6 The cotton industry 87
7 The iron industry 103
8 The sources of innovation "9
9 The role of labour 142
10 The role of capital 165
11 The role of the banks 183
12 The adoption of free trade 203
13 The role of government 219
>4 Economic growth and economic cycles 238
'5 Standards of living 255
16 The achievement 272
Guide to further reading 296
Subject index 308
Index of authors cited
PREFACE TO THE FIRST
EDITION
In recent years economists and policy makers have become

increasingly concerned with questions of economic growth, and
in particular with the problem of identifying the route by which
today's poor countries might reach the high standards of living
presently enjoyed by the industrial societies. Historians too have
been impelled by the urgent contemporary problem to analyse
their material in a new way, to apply the concepts of the
economic-growth theorists and to seek the explanations under-
lying the relatively few cases of successful industrialization.
This book, which originated in a course of lectures given for
undergraduates reading for Part I of the Cambridge Economics
Tripos, is a product of the current interest in economic
development. It is a study of the development of the British
economy over the period 1750—1850 when the first industrial
revolution took place and modern economic growth effectively
began. The fact that the crucial break-through was achieved
spontaneously and without the advantages of either planning
or foresight seems to give it a special relevance to the problems
of countries which are currently finding it difficult to begin or
to sustain a process of industrialization. This is an attempt to
apply the concepts and techniques of development economics
to a vital section of the historical record.
Except in so far as it embodies some of the results of an inquiry
into British economic growth which Dr W. A. Cole and I
carried out at the Department of Applied Economics some years
ago, it is not the product of original research. It draws heavily
on the work of the now numerous economic and social historians
who have been looking at the past through development
spectacles, as well as on the classic histories of the industrial
revolution; so much so indeed that this book is little more than
a synthesis of their ideas and researches and the debt which it
Vll
viii PREFACE TO THE FIRST EDITION
owes to them is inadequately reflected in the many direct
quotations and footnote references.
There are four individuals to whom I should like to take this
opportunity of expressing my gratitude more specifically,
however. They are Professor Simon Kuznets, who first aroused
my interest in the historical analysis of economic development;
Professor T. S. Ashton, whose insight into this period of British
history has coloured my own thinking to an immeasurable
extent; Professor David Joslin, who read and commented on a
very early draft; and Miss Edith Whetham, who put me right
on some matters of agricultural history. It goes without saying
that they are all innocent of any errors of fact, interpretation
or analysis that I have committed here.
Cambridge, June 1965 P.M.D.
PREFACE TO THE SECOND
EDITION
My aim in revising this book has been to take account of the

major new knowledge and ideas on the industrial revolution
emerging from the research results which have been published
in the (roughly) fifteen years since the first edition went to press.
The new knowledge has made it possible to write with more
confidence or precision on a number of issues where paucity of
evidence had led me to tentative, vague or misconceived
conclusions. Lively recent debates in the journals and the
criticisms I have got from reviews, colleagues and students (not
only my own, but also from students who have been good
enough to write to me on points of detail) have stimulated me
to alter, or to put a different slant on, judgments which now
seem to me to have been ill formulated. Apart from such
rewritten passages, the major changes involved in the revision
have taken the form of expanding the text in areas where we
now know more, or where other questions have become of
interest, and of incorporating references to recent publications.
Those who are familiar with the first edition will find that the
section which has been most extensively altered is the updated
guide to future reading. In an effort to keep this deliberately
introductory bibliography to a reasonable length, I have made
way for new references by omitting some of the seminal items
recorded in the first edition, knowing that they are fully referred
to in the more recent sources, and I have generally omitted
references to articles reprinted in books of readings on contro-
versial topics already included.
Cambridge, July ig?8 p. M . D .
IX
CHAPTER I
THE STARTING POINT
It is now almost an axiom of the theory of economic development

that the route to affluence lies by way of an industrial revolution.
A continuous—some would say 'self-sustaining'—process of
economic growth, whereby (wars and natural disasters apart)
each generation can confidently expect to enjoy higher levels
of production and consumption than its predecessors, is open
only to those nations which industrialize. The striking disparity
between the standards of living of the inhabitants of the so-called
developed or advanced countries of the mid twentieth century
and the standards prevailing in today's underdeveloped or
backward countries is essentially due to the fact that the former
have industrialized and the latter have not.
This does not imply that there is some definite process or event
called an industrial revolution which takes the same form in all
countries in which it occurs. But it does imply that there are
certain identifiable changes in the methods and characteristics
of economic organization which, taken together, constitute a
development of the kind which we would describe as an
industrial revolution. These include the following related
changes: (i) widespread and systematic application of modern
science and empirical knowledge to the process of production
for the market; (2) specialization of economic activity directed
towards production for national and international markets
rather than for family or parochial use; (3) movement of
population from rural to urban communities; (4) enlargement
and depersonalization of the typical unit of production so that
it comes to be based less on the family or the tribe and more
on the corporate or public enterprise; (5) movement of labour
from activities concerned with the production of primary
products to the production of manufactured goods and services;
(6) intensive and extensive use of capital resources as a substitute
for and complement to human effort; (7) emergence of new
2 THE FIRST INDUSTRIAL REVOLUTION
social and occupational classes determined by ownership of or

relationship to the means of production other than land, namely
capital.
These interrelated changes, if they develop together and to
a sufficient degree, constitute an industrial revolution. They
have always been associated with a growth of population and
with an increase in the annual volume of goods and services
produced.
The first industrial revolution occurred in Great Britain and
is of particular interest in that it occurred spontaneously,
without the government assistance which has been characteristic
of most succeeding industrial revolutions. Exactly when it took
place is a matter of controversy. The first economic historian
to discuss the British experience of industrialization in terms of
this concept of a specific revolution was Arnold Toynbee, who
delivered a course of lectures on the subject in the University
of Oxford in the year 1880/1. l He took his starting-point as 1760
and for about half a century this view of the matter went
unchallenged, until Professor Nef, the American historian,
questioned the significance of the historical boundary it implied.
He stressed the essential continuity of history and traced the
beginnings of large-scale industry and technological change
back to the sixteenth and early seventeenth centuries. According
to Nef: 'The rise of industrialism in Great Britain can be more
properly regarded as a long process stretching back to the
middle of the sixteenth century and coming down to the final
triumph of the industrial state towards the end of the nine-
teenth, than as a sudden phenomenon associated with the late
eighteenth and early nineteenth centuries.' 2
More recently, new interpretations have emerged from the
work of economic historians, who have begun to explore and
depend more heavily on the statistical evidence bearing upon
the rate of economic growth. Because the overseas trade records
constitute the best and most comprehensive set of statistical
series covering the whole of the eighteenth century, the move-
ments in foreign trade have largely conditioned the statistical
interpretation of the industrial revolution. Paul Mantoux,
1
Toynbee died in 1883 at the age of thirty but his lectures had made a tremendous
impact on his pupils and in 1884 they published his Lectures on the Industrial Revolution
in England on the basis of his and their notes of the lectures he gave in Oxford in
1880/1.
2
J. U. Nef, Economic History Review (1934), reprinted in E. M. Carus-Wilson, Essays in
Economic History (1954), vol. 1, p. 105.
THE STARTING-POINT 3
writing in the 1920's, had already pointed out that the curves
of imports and exports and tonnage cleared from British ports
'rise almost vertically towards the end' of the eighteenth
century, that is, following the slump of 1781 occasioned by the
American War. l Professor Ashton has developed this theme:
After 1782 almost every available statistical series of industrial output
reveals a sharp upward turn. More than half the growth in the
shipments of coal and the mining of copper, more than three-quarters
of the increase of broad cloths, four-fifths of that of printed cloth and
nine-tenths of the exports of cotton goods were concentrated in the
last eighteen years of the century.2
Professor Hoffmann, the German economist who compiled an
index of industrial output for Britain, concluded that 'the year
1780 is the approximate date at which the annual percentage
rate of industrial growth was first greater than two, a level at
which it remained for more than a century'. 3
The current convention then is to date the first industrial
revolution from the 1780's when the statistics of British inter-
national trade show a significant upward movement. Following
this convention, Professor W. Rostow has suggested an even
more precise historical boundary and has developed the theory
that the period 1783-1802 was 'the great watershed in the life
of modern societies'. This is the period which he defined as the
' take-off into sustained growth' for the British economy, the
interval when the forces of modernization made their decisive
breakthrough and set up an automatic and irreversible process
of economic growth.4
At one extreme then we have Professor Nef tracing the
beginnings of the industrial revolution back to the middle of the
sixteenth century, to the new capitalistic industries of Eliza-
bethan times: at the other extreme we have Professor Rostow's
dramatic compression of the essential transformation into a
couple of decades at the end of the eighteenth century. The
debate goes on. But fundamentally the differences between the
1
Paul Mantoux, The Industrial Revolution in the Eighteenth Century, 12th ed. (1961), with
introduction by T. S. Ashton.
2
T. S. Ashton, The Eighteenth Century (1955), p. 125; see also Asa Briggs, The Age of
Improvement (1959), p. 18.
3
W. Hoffmann, British Industry 1700-1950 (1955), p. 30.
4
W. W. Rostow, The Stages of Economic Growth (i960). But see Rostow's later study,
The World Economy (1978), where the British take-off is dated 1783-1830 and the
1783-1802 phase is characterized as an 'initial surge'.
protagonists in the debate are differences of emphasis rather
than substance. No one would deny that the period which began
around the middle of the eighteenth century was a period in
which important and far-reaching changes took place in the
characteristic tempo of economic life in Britain, and that these
constituted a transformation that was, in a sense, the prototype
of the transition from pre-industrial to industrial forms of
economic organization which is everywhere a necessary con-
dition of modern economic development. Those who, like Nef,
choose to emphasize the underlying continuity of history will
trace the origins of the process of industrialization back to
earlier centuries. Those who, like Rostow, prefer to focus on the
significant discontinuities of history will stress the revolutionary
character of the changes taking place in relatively short periods
of time and will look for the crucial watersheds, the irreversible
upturns in the statistical series. These are differences in methods
of historical analysis and interpretation rather than disputes
about what actually happened in history. To understand the
process of economic change one needs to take both approaches
into account, and to recognize the significant discontinuities in
the 'seamless web' of history.
If we take our starting-point as the middle of the eighteenth
century, then, we begin with pre-industrial Britain, though it
is evident that the process of industrialization had already
begun. Within the following century a revolution took place in
the social and economic life of Britain which transformed the
physical appearance of the land and established a totally
different way of living and working for the mass of its people.
This first industrial revolution is of special interest not only to
historians but also to students of modern economic development.
For it represented the spontaneous beginnings of the process
which created the affluent societies of today, a way of escape
from poverty which roughly two-thirds of the inhabitants of the
modern world, the people of the underdeveloped countries, are
now desperately trying to discover for themselves.
What kind of economy, then, was the pre-industrial English
economy of the mid eighteenth century? How like was it to the
pre-industrial countries of the present day in, say, Asia, or Africa
or South America? Can we assess the characteristics which
distinguished it from its own developed form or from the
industrialized countries of the mid nineteenth century? A list
of the characteristics of twentieth-century pre-industrial econo-

mies would stress their extreme poverty, their slow rate of
economic development, their unskilled, unspecialized labour
force and their regional disparities—that is, the wide differences
in standards of living or of economic development as between
one region and the next. How far were these factors—poverty,
stagnation, dependence on agriculture, lack of specialization
or of regional integration—characteristic of eighteenth-
century England?
I. POVERTY
First, then, how poor were the people of eighteenth-century

England?
One way of measuring poverty on a national scale is to
express it in terms of national-income data. The national
income of a country represents the sum total of the goods and
services bought by or produced by its people during a given
year. Since a community's income depends on the value of what
it produces and its purchasing power depends on its income,
there are in effect three ways of calculating the national income:
(i) by aggregating all the incomes earned by its residents, (2)
by valuing all the goods and services produced by them, and
(3) by summing their expenditures. In principle, after making
the kind of adjustments required to eliminate double counting
(e.g. counting only once the goods that are embodied in the
production of other goods produced within the same year), these
three ways of calculating the national income must lead to the
same result, which is a convenient measure of the total value
of a nation's economic activity. If we divide the national income,
thus calculated, by the population sharing in it, we get an
average which can be regarded as an index of the prevailing
level of productivity or of living standards.
Clearly any calculation of this kind which is based on
eighteenth-century statistics must be very rough indeed. But if
we are prepared to rely on the national-income calculations
made by reputable observers living at the periods in which we
are interested we can establish some benchmarks which may at
any rate indicate the orders of magnitude involved. One of the
earliest estimates of national income made for England and
Wales was that compiled by Gregory King at the end of the
seventeenth century to illustrate the economic strength of the
T A B L E I. A Scheme of the Income & Expence of the several Families of England Calculated for the Tear 1688
Number Ranks Degrees Heads Number Yearly Totall of the Yearly Expence Increase Totall
of Titles and per of Income per Estates or Income per per Increase
Families Qualifications Family Persons Family Income per Head Head Head per annum
£ s. £ £ s. £ s. 4, £ s. 4. £
160 Temporall Lords 40 6,400 2800 0 448,000 70 0 60 0 0 10 00 64,000
26 Spirituall Lords 20 520 1300 0 33,800 65 0 55 ° ° 10 0 0 5,200
800 Baronets 16 12,800 880 0 704,000 55 0 51 00 4 00 51,200
600 Knights 13 7,800 650 0 390,000 50 0 46 00 4 0 0 31,200
3,000 Esquires ... 10 30,000 450 0 1,200,000 45 ° 42 00 3 0 0 90,000
12,000 Gentlemen . . . ... 8 96,000 280 0 2,880,000 35 ° 32 10 0 2 10 0 240,000
5,000 Persons in offices 8 40,000 240 0 1,200,000 30 0 27 00 3 0 0 120,000
5,000 Persons in offices 6 30,000 120 0 600,000 20 0 18 00 2 0 0 60,000
2,000 Merchants & Traders by Sea 8 16,000 400 0 800,000 50 0 40 00 10 0 0 160,000
8,000 Merchants & Traders by Sea 6 48,000 200 0 1,600,000 33 0 28 00 5 0 0 240,000
10,000 Persons in the Law . . . 7 70,000 140 0 1,400,000 20 0 17 00 3 0 0 210,000
2,000 Clergy Men . . . 6 12,000 60 0 120,000 10 0 9 0 0 1 0 0 12,000
8,000 Clergy Men . . . 5 40,000 45 0 360,000 9 0 8 0 0 1 0 0 40,000
40,000 Freeholders . . . 7 280,000 84 0 3,360,000 12 0 II 00 1 0 0 280,000
140,000 Freeholders . . . 5 700,000 50 0 7,000,000 10 0 9 10 0 10 0 350,000
150,000 Farmers 5 750,000 44 0 6,600,000 8 15 8 10 0 5 0 187,000
16,000 Persons in Sciences & Lib. arts 5 80,000 60 0 960,000 12 0 II IO O 1 10 0 40,000
40,000 Shopkeepers & Tradesmen . . . 4? 180,000 45 0 1,800,000 10 0 9 10 0 10 0 90,000
60,000 Artizans & handycrafts 4 240,000 40 0 2,400,000 10 0 9 10 0 10 0 120,000
5,000 Naval officers... ... 4 20,000 80 0 400,000 20 0 18 0 0 2 0 0 40,000
4,000 Military officers 4 16,000 60 0 240,000 15 0 14 0 0 1 0 0 16,000
5H,586 5* 2,675,520 67 0 34,495,800 12 18 12 0 0 18 0 2,447,100

Decrease
50,000 Common Seamen 3 150,000 20 0 1,000,000 7 0 7 10 0 "10 0 75,000
364,000 Labouring People & 35- 1,275,000 •5 0 5,460,000 4 10 4 12 0 2 0 127,500
outservants ...
400,000 Cottagers & Paupers 3f 1,300,000 6 IO 2,000,000 2 0 2 5 0 5° 325,000
35,ooo Common Souldiers 2 70,000 •4 0 490,000 7 0 7 10 0 10 0 35.°°°
849,000 3* 2,795,000 10 IO 8,950,000 3 5 3 9° 4 0 562,000
Vagrants . . . 30,000 60,000 2 0 3 0 0 1 0 0 60,000
849,000 3? 2,825,000 IO IO 9,010,000 3 3 3 76 46 622,000
So the General Account is

£ s. £ £ s. £ s. d.£ s. d. £
51 1,586 Increasing the wealth of the 2,675,520 67 o 34,495,800 12 18 12 00 18 o 2,447,100
Kingdom
849,000 Decreasing the wealth of the 2,825,000 10 10 9,010,000 3 3 3 7 6 4 6 622,000
Kingdom.
360.586 Neat Totalls 5,500,520 £32 o £43>5<>5,8oo £y 18 £ 7 1 1 3 £0 6 9 £1,825,100
SOURCE: Gregory King, Natural and Political Observations and Conclusions upon the State and Condition of England, reprinted in
Two Tracts by Gregory King, ed. George E. Barnett (Baltimore, 1936).
economy at the time of the Glorious Revolution:1 it is repro-

duced as Table i. The next systematic attempt of this kind, so
far as we know, was Joseph Massie's list of the numbers and
earnings of different classes of the community, constructed for
a more limited purpose—that of showing how the burden of a
tax on sugar was distributed over the nation.2 Finally, at the
end of the eighteenth century and at the beginning of the
nineteenth century, Pitt's income tax stimulated a number of
similar calculations of national income designed to assess the
taxable capacity of the country.3
If we take these estimates of contemporaries as our data, and
adjust them to fit modern concepts of what is contained in the
national income, we may deduce that the national income of
England and Wales at the end of the seventeenth century
amounted to a total which suggests an average of between £ 8
and £g per annum per head of the population: in the 1750's
it was probably between £12 and £13, again per head of the
total population: at the end of the eighteenth century the
corresponding average was about £22. Of course it is difficult
to understand what the money incomes mean in real terms
without knowing what they would buy. Prices change and the
value of money alters. If we could measure the extent to which
prices have changed over the past two to three hundred years
we ought to be able to see eighteenth-century incomes in terms
of today's money values. Unfortunately, the persistent inflation
of prices since the Second World War and the accelerated
inflation which set in at the end of the 1960's has made of today's
values a highly ephemeral notion. An attempt to trace the
course of the price indices for the period between say, 1754 and
1954 indicates that the general level of prices multiplied roughly
six times in two centuries: but between 1956 and 1976 U.K.
prices more than trebled in just two decades while in some
1
King's careful table of the income and expenditure of each social group in England
and Wales in 1688 is deservedly famous and has been reprinted many times. The
original tract from which it is extracted appears in full in Two Tracts by Gregory King,
edited with an introduction by George E. Barnett, Baltimore (1936). It is reclassified
in modern form as a set of social accounts in Phyllis Deane and W. A. Cole, British
Economic Growth 1688-igjg (1962).
2
P. Mathias, 'The Social Structure in the Eighteenth Century: a Calculation by
Joseph Massie', Economic History Review, vol. x (August 1957).
3
Phyllis Deane, 'The Implications of Early National Income Estimates for the
Measurement of Long-term Economic Growth in the United Kingdom', Economic
Development and Cultural Change (1955).
contemporary newly developing countries the price rise was

even more spectacular.
It may nevertheless be interesting to draw a rough comparison
between estimates of the English national income level on the
eve of the first industrial revolution and the corresponding levels
for today's third-world countries beginning their first great
spurt of industrialization. Applying the evidence of the price
indices we might conclude that an average of £\2 per head per
annum for the early 1750's should be inflated to a level of about
£90 to give an order of magnitude for the early 1960's. It would
appear then that this represents a relatively high national
income level by comparison with mid-twentieth-century newly-
developing countries: the average for Nigeria in the early 1960's
has been put at about a third of this figure and that for India
lower still. Probably the average calculated for some of today's
Central and South American countries came closer to the
estimated level for mid eighteenth-century England: the average
for Brazil in 1961, for example, has been put at about £95 and
for Mexico ^ i o s . 1
These rough calculations involving imprecise comparisons
across wide distances of time and space are obviously crude and
impressionistic. They certainly do not provide useful measures
of relative living standards. All that we can reasonably deduce
from them is that the level of economic development reached
by England on the threshold of the first industrial revolution
was distinctly higher than that prevailing in the developing
countries of South Asia and Africa when they began to indus-
trialize rapidly. This deduction is supported by other sorts of
evidence for the view that pre-industrial England was more
favourably situated than most mid twentieth-century under-
developed economies. There is, for example, the evidence that
the English economy was producing a substantial surplus of the
nation's staple food. In 1750 the corn export was equivalent to
the subsistence requirements of roughly a quarter of the total
population of England. If India had a food surplus of this
relative magnitude her foreign exchange problems would surely
shrink. In 1751, to take another example, more than 7 million
gallons of British spirits were charged to duty in England:
indeed at the peak of the gin-drinking boom in England the
1
P. Rosenstein-Rodan, 'International Aid for Underdeveloped Countries'. Review of
Economics and Statistics (1961).
IO THE FIRST I N D U S T R I A L REVOLUTION
figure exceeded 8 million gallons and consumption averaged

nearly iy gallons per head of the total population (men, women
and children)—which is a very high rate of consumption of hard
liquor by any standards. Statistics such as these do not suggest
a high standard of material well-being but they do indicate the
existence of an economic surplus, even if this was distributed
through socially undesirable channels.
The seasonal rise in the death rate in winter, the periodic food
riots and the squalor and disease of the overcrowded townships
give evidence of a level of living for the mass of the people that
was exceedingly vulnerable to temporary hardship. But in the
ordinary course of events and in the average country parish in
which the majority of people lived, the paupers could rely on
being relieved from complete destitution by the Poor Law in
childhood, sickness and old age. It has even been argued that
the labouring poor enjoyed higher standards of living in the
immediately pre-industrial era than in the decades of economic
and social revolution which followed. The Hammonds, for
example, claimed that 'in comparison with the dishevelled
century that follows, the eighteenth century was neat, well
dressed and nicely appointed V We shall come back to this view
when we come to discuss the famous controversy concerning the
workers' standard of living in the industrial revolution, but at
this stage the point to notice is that although the standard of
life was simple, and sometimes disastrously vulnerable to
climatic extremes in the mid eighteenth century, there was some
economic surplus, some slack in the economy.
In all this, it may be noted, the English were better off than
most of their contemporaries in other countries. In the
eighteenth century it was obvious to contemporaries that the
three richest countries in the world were Holland, England and
France. This was the view of Gregory King writing in the 1690's
and Adam Smith ranked them similarly in the 1770's. Probably
there was little difference between the standards of living of
English and Dutch by the middle of the eighteenth century, but
there seems little doubt that the average Englishman was
appreciably better off than his French counterpart. Foreign
observers travelling in England remarked on the fact that ' the
English labourer is better cloathed, better fed and better lodged
1
J. L. and B. Hammond, The Village Labourer 1760-1832 (1911), p. 129.
THE STARTING-POINT II
1
than the French'. Arthur Young travelling in France on the
eve of the French revolution (i.e. in the 1780's) calculated that
the French labouring classes ' are 76 per cent less at their ease:
worse fed, worse clothed and worse supported than the same
classes in England'. 2 Unlike today's poverty-stricken millions
whose lot is worsened by the visible affluence of neighbouring
countries, eighteenth-century Englishmen were relatively well-
off compared with most foreigners. Perhaps this is why a
historian looking at the condition of the English people in the
eighteenth century found 'little evidence to show that the
average member of the labouring poor was filled with bitter
resentment or economic despair'. 3
2. STAGNATION
Another characteristic of a pre-industrial community which

distinguishes it from an industrialized one is that its level of
living and of productivity is relatively stagnant. This is not to
say that there is no economic change, no economic growth even,
in a pre-industrial economy, but that such growth as does occur
is either painfully slow or spasmodic, or is readily reversible.
It is fair to say that before the second half of the eighteenth
century people had no reason to expect growth. Pamphleteers
writing in the 1740's, for example, used Sir William Petty's or
Gregory King's estimates, made half a century or more before,
to illustrate their assessments of the current economic situation.
So little evidence did they see for economic growth that they
were prepared to adopt calculations made in the 1670's or the
1690's to reflect the conditions of the 1740's. Population, prices
and productivity could, they judged, fluctuate upwards as
readily as downwards and there was no reason to expect them
to go in one direction rather than the other.
So far as we can judge they were broadly right in their
assumptions. Population, for example, fluctuated between about
5*8 and 6*o millions in the first four or five decades of the
eighteenth century and was only about 5*9 million in 1741.4
Recent attempts to measure the rate of growth in output per
1
J. H. Meister, Letters written during a residence in England (1799), p. 9.
2
Arthur Young, Travels in France, ed. Maxwell (1929), p. 315.
3
Dorothy Marshall, English People in the Eighteenth Century (1956), p. 193.
4
These are Brownlee's estimates: See B. R. Mitchell, Abstract of British Historical
Statistics (1926), p. 5, for a comparison with other estimates, and below pp. 23-4,
for a discussion of the reliability of eighteenth-century population estimates.
head suggest that there was some improvement in the first half
of the century but it was so slow that it would have taken about
a century and a half to double the standard of living.1 The
ordinary man saw little evidence of economic growth within his
own lifetime and no improvement that could not be eliminated
within a single year by the incidence of a bad harvest or a war
or an epidemic. Thus in pre-industrial England, as in many of
today's pre-industrial societies,2 the normal long-term rate of
growth in real incomes per head was under half of one per cent
per annum, and it was almost as common for the economy to
slide into decline as it was for it to grow. Indeed there is some
evidence to suggest that the standard of living of the eighteenth-
century Englishman may actually have been lower than that
of his counterpart at the end of the fifteenth century. Professor
Phelps Brown, for example, has examined the figures of building-
craftsmen's wages and the prices of the goods that these would
buy, and has concluded that there was 'an advance in produc-
tivity deserving the title of a revolution that about doubled the
commodity equivalent [of builders' wages] between the Black
Death (1349) and Agincourt (1415)'. This plateau of prosperity
was apparently maintained for nearly a century and was
followed by a great decline—so great that by 1630 the builder's
real wage was perhaps' as little as two-fifths of what it had been
through much of the fifteenth century'. 3
In effect, the levels of living in pre-industrial communities are
not static in the sense of never changing, but are stagnant in
the sense that the forces working for an improvement in output
or productivity are no stronger over the long run than the forces
working for a decline. An economy of this kind tends to be
characterized by long secular swings in incomes per head, in
which the significant variable is not so much the rate of growth
of output as the rate of growth of population. When population
rose in pre-industrial England, product per head fell: and if, for
some reason (a new technique of production or the discovery
of a new resource, for example, or the opening up of a new
market), output rose, population was not slow in following and
1
Deane and Cole, British Economic Growth.
1
Phyllis Deane, 'The Long Term Trends in World Economic Growth', Malayan
Economic Review, vol. vi (1961).
3
E. H. Phelps Brown and Sheila V. Hopkins, 'Builders' Wage-rates, Prices and
Population: Some Further Evidence', Economica (1956), p. 306.
eventually levelling out the original gain in incomes per head.

Alternately raised by prosperity and depressed by disease,
population was ultimately contained within relatively narrow
limits by static or slowly growing food supplies.
This essentially stagnant character of the pre-industrial com-
munity was reflected in its social and institutional framework.
Social structure and place within the hierarchy of incomes were
still closely linked with land rights: density of population was
largely determined by the fertility of the soil and its distribution
was frozen by institutional rigidities. Labour mobility, for
example, was restricted by the 1662 Law of Settlement, which
placed the burden of poor relief fairly and squarely on the
parish. Families living near the margin of subsistence, and the
majority were in this state, were imprisoned within their own
parishes by the knowledge that there alone could they qualify
for poor relief when overtaken by economic misfortune: and
while agriculture remained the basic source of livelihood there
were few families that did not live under the constant threat of
climatic disaster.
3. DEPENDENCE ON AGRICULTURE
It goes without saying that a pre-industrial economy is one in
which the principal economic activity is agricultural production.
To quote a modern writer on economic development: 'An
underdeveloped country may be defined as a country with 80
per cent of its people in agriculture and a developed country
as one with 15 per cent of its employment in agriculture, in both
cases giving or taking a little according to foreign trade. 5| How
underdeveloped was mid-eighteenth-century England according
to this criterion?
We cannot say precisely how many people were engaged in
agriculture, for there was no reliable census of occupations taken
in England until 1841—by which time the industrial revolution
was certainly more than half a century old. On the other hand
we can get some idea of the situation at the end of the
seventeenth century, say, by examining Gregory King's famous
' Scheme of the income and expence of the several families of
England' (Table 1, p. 6). If we look at that part of his list which
deals with families who were 'increasing the wealth of the
1
H. Singer, 'The Concept of Economic Growth in Economic development', in
Economic Growth, ed. Eastin Nelson (i960), p. 73.
nation', that is the families who were taking the most important
economic decisions (which excludes the labourers, the cottagers,
and the paupers, and the soldiers and seamen), and if we deduct
those who were not mainly dependent on agriculture for their
livelihood (civil servants, officers in the armed forces, merchants,
shopkeepers, persons in the professions, and artisans and crafts-
men) we are left with a group of primarily agricultural families
who account for about 68 per cent of the total. By 1750 the
proportion had almost certainly fallen somewhat, if only because
there had been a greater degree of urbanization and some
expansion of industry and overseas trade, but probably it still
lay between about 60 and 70 per cent.
It is evident that the economy was predominantly agricul-
tural, the population predominantly rural, and that the
characteristic unit of production was the family. The principal
industries—the textile trades in particular—were organized on
a domestic basis and were subordinate to agriculture. Most of
those who were engaged in making either woollen or cotton
goods were working in their own homes. In the cotton industry,
for example, women and children picked, cleaned and spun the
raw cotton, and the men wove it. Nailmakers and other metal
workers generally worked in sheds attached to their cottages.
When a writer in the early eighteenth century calculated that
nearly a million people were employed in the British woollen
industry, for example, he may not have been exaggerating as
wildly as is sometimes supposed. If every man who eked out his
agricultural earnings by weaving in the farmers' slack seasons,
if every woman who occasionally took in wool to spin and every
child which helped its parents by carding wool was included in
the total, it is not difficult to accept the possibility that one in
ten of the population was concerned in the woollen industry.
As late as 1841, official census returns for Ireland (then still at
a pre-industrial stage) recorded a proportion of nearly one in
eight occupied persons engaged in the textile industries.
Most of the inhabitants of eighteenth-century England lived
in rural areas, though the towns were already beginning to
expand. In 1695, again according to Gregory King, about a
quarter of the population of England and Wales lived in the
cities and market-towns, but most of these market-towns were
barely more than large villages. Outside London (with about
half a million inhabitants) there were only three towns in
England with more than 10,000 inhabitants—Norwich (with
about 29,000), Bristol (with about 25,000) and Birmingham
(with perhaps 12,000). By the middle of the eighteenth century
the proportion of the population living in concentrations of
5,000 or more probably did not exceed 16 per cent. Most of them
still lived in London, but Liverpool and Birmingham had joined
Norwich and Bristol among the towns of over 25,000 and
Manchester was rapidly growing towards this kind of size. Only
one Englishman out of every five lived in a large town.
4 . LACK OF OCCUPATIONAL SPECIALIZATION
A fourth respect in which a pre-industrial economy can generally
be distinguished from an industrialized economy is that the
latter is relatively specialized. It is rare for the industrial worker
to make a complete article. He generally plays his part in the
production process by performing a particular kind of task
(sometimes a single distinct operation) in the lengthy chain of
operations whereby a raw material is converted into a purchase
by a final consumer. By contrast the worker in a pre-industrial
economy is generally engaged in a variety of occupations and
even in a variety of industries. He is typically a 'jack of all
trades'.
There are plenty of illustrations of the unspecialized character
of the labour force in eighteenth-century England. The major
industries were domestic industries subordinate to agriculture:
many of the labourers, even in capitalistic industries like mining,
building or iron-working, moved from industrial to agricultural
occupations at times of harvest or planting: and domestic
servants were generally as occupied with their master's trade or
industry as with his household. Peter Stubs, the industrialist
whose career in the second half of eighteenth century has been
described by Ashton, was innkeeper, maltster, brewer and
filemaker at one and the same time.1
On the other hand, eighteenth-century England was not as
unspecialized as some of today's underdeveloped regions of Asia
or Africa where so much of economic activity is subsistence
activity, that is concerned with the production of goods and
services which never enter into the process of exchange but are
consumed by the producer and his immediate family. The
1
T. S. Ashton, An Eighteenth Century Industrialist (1939).
l6 THE FIRST INDUSTRIAL REVOLUTION
subsistence sector seems to have dwindled to minor importance

in England even by the seventeenth century. If there were any
producers who got the greater part of their incomes from
untraded production they must have fallen within the category
of'cottagers and paupers' when Gregory King was drawing up
his table of families at the end of the seventeenth century. Yet
these accounted for under 6 per cent of national income and
less than a quarter of the total population. A century or so later,
when Patrick Colquhoun drew up a comparable list for 1803
of families and incomes in England and Wales, the subsistence
producer seems to have faded into insignificance, for Colquhoun
distinguishes no cottager class as such.1
In effect, the degree of specialization of the labour force is one
index of the degree of economic development achieved by a
community, and by the end of the eighteenth century Britain
had already developed a fairly complex market economy. The
income of the typical producer depended heavily on the
production of goods and services for exchange in the market,
often for exchange on an international market. There were
already the beginnings of a proletariat in eighteenth-century
England; that is, a working-class population without property
which depended for its livelihood on employment by a proper-
tied or capitalist group. By the time Adam Smith was writing
in the 1770's there were factories which carried the division of
labour to a considerable extent. His description of a pin factory
in which the manufacture of a pin required eighteen distinct
operations, each of which could be performed by a separate
man, is the classic illustration of the advantages of the division
of labour. 2 It was not yet true, of course, that the typical
producer was an employee. In a modern industrialized econ-
omy the share of the national income going to employees is
usually more than two-thirds—certainly more than half:
whereas in today's underdeveloped areas (as in present-day
Nigeria) the proportion may be less than 20 per cent. In early
eighteenth-century England, if we may judge from Gregory
King's tables, roughly a third of the national income was
distributed in the form of wages and salaries: and in the light
of the increased urbanization and the reduction of the
subsistence sector which had certainly taken place by 1750 we
1
P. Colquhoun, Treatise on Indigence (1806).
2
Adam Smith, The Wealth of Nations, Cannan ed. (1950), pp. 6-7.
may reasonably deduce that it had risen above a third by
mid-century.
More significant, however, than the disappearance of the
subsistence sector or the growth of a proletarian labour force,
were the specialized economic institutions which had been
developed in eighteenth-century England. Trade with North
America, Africa, India and the Levant was organized by
chartered companies who got much of their capital from
non-participant shareholders. The risks of overseas trade were
covered by specialist underwriters and insurance brokers. The
Bank of England had been set up in 1694 and by the middle
of the eighteenth century the British banking system was
providing extensive and complex financial services to the British
government and to British and foreign merchants. The banking
system had to develop a good deal more before it became as
efficient in supplying currency and credit as it did in the
nineteenth century. But it was nevertheless a system and as such
it was superior to the indigenous monetary framework of most
present-day underdeveloped countries.
5. THE LOW DEGREE OF GEOGRAPHICAL INTEGRATION
Finally, a fifth characteristic of a pre-industrial economy, which
arises in part out of its dependence on agriculture and in part
out of its low level of specialization, is the lack of integration
among its regions. This is the result of a poor system of
communications. The consequence is that for mid-eighteenth-
century England the national economy is not always the most
convenient unit of economic analysis. Most economic decisions
were taken in relation to the conditions of the regional market,
and as between one region and another the quality and levels
of economic activity and the character and direction of economic
change varied substantially. Regional differences in soils and
climate, for example, associated with differences in purchasing
power and local taste, led to different patterns of local con-
sumption. The staple foodstuff might be wheat or oats or barley
or rye. Money wages varied widely in level and trend; Mrs
Gilboy found in her investigation of eighteenth-century wages
no general tendency common to the three regions she considered
(London, Lancashire and the South West): 'Not only the
movement but the levels of wages differed.'1 Commodity price
1
E. Gilboy, Wages in Eighteenth Century England (1934), p. 219.
and output data show similar regional differences. When iron
output was declining in most regions it was expanding in
Shropshire and Staffordshire. The rise in the Yorkshire woollen
industry was accompanied by the decline in East Anglian
industry.
The effect of these regional variations in economic conditions
is that statistics relating to a particular area may give no
indication of the comparable movements for the nation as a
whole and that the national aggregates may obscure the trends
for regions in which the significant changes are taking place. An
attempt to assess the quality and rate of economic change at the
national level may not lead to meaningful results whether we
are looking for the significant continuities or for the significant
discontinuities of history.
In sum, therefore, it is evident that the British economy of the

mid eighteenth century displayed (though to a limited extent)
a number of the features which we now recognize as charac-
teristic of a pre-industrial economy. It was poor, though not
without some economic surplus; it was relatively stagnant,
though not completely static; it was based on agriculture as its
main economic activity, though commerce and industry—there
was even some factory industry—were important sectors. The
mass of the people lived close to economic disaster and, unless
they were unusually lucky or hardworking, they had little
prospect of enjoying an appreciably higher standard of living
within their lifetime. Most of the community's economic deci-
sions were taken by family-based units of production, whose
output per member of the work force depended largely on the
extent of their holdings in land, ships or stocks of consumer
goods. It might be described as a 'traditional society' in the
sense defined by Rostow as the first of his stages of economic
growth. That is to say it was an economy in which something
like 'a ceiling existed on the level of attainable output per
head'. 1 Unlike an industrialized economy in which the regular
and systematic application of modern science and technology
ensures a continuous improvement in methods of production,
its productive possibilities were contained within narrow and
relatively predictable limits, though by the eighteenth century
these limits were already being pushed outwards.
1
Rostow, Stages of Economic Growth, p. 4.
THE STARTING-POINT IO,
The beginnings of industrialization and growth and structural

change were clearly apparent by the middle of the eighteenth
century. Population had begun to grow continuously in the
1740's. Pamphleteers writing in the early 1740's had written as
though population, prices and incomes were much the same as
they had been half a century ago. Adam Smith and Arthur
Young, writing in the 1770^ before the introduction of the
innovations in textiles, steam and iron which symbolized the
beginnings of the industrial revolution, were able to look back
on an expansion in real incomes which was large enough to be
obvious to contemporaries. In 1774, for example, Young wrote:
Let any person consider the progress of everything in Britain during
the last twenty years, the great improvements we have seen in this
period, superior to those of any other, are not owing to the constitution,
to moderate taxation or to other circumstances of equal efficacy ever
since the Revolution, as the existence of these circumstances did not
before produce equal effects—the superiority has been owing to the
quantity of wealth in the nation which has in a prodigious degree,
facilitated the execution of all great works of improvement.1
Adam Smith, writing at about the same time, referred to the
'natural progress of England towards wealth and improve-
ment', and claimed that 'the annual produce of its land and
labour is, undoubtedly, much greater at present than it was
either at the restoration or the revolution'. 2
Whether this self-evident economic expansion was in its
initial stages any more significant than the upturns which had
occurred often before in English pre-industrial history—and
been subsequently reversed—is a matter of dispute. That the
trend in population, prices, output and incomes was already
turning upwards by 1750 is not, however, in doubt.
1
A r t h u r Y o u n g , Political Arithmetic (1774), p . 49.
2
Adam Smith, Wealth of Nations, Cannan ed., vol. 1, p. 327.
CHAPTER 2
THE DEMOGRAPHIC
REVOLUTION
Although there is still room for considerable differences of

opinion concerning the exact timing of the crucial turning-points
in British economic development, there is a general consensus
among economic historians that sustained growth—modern
economic growth some would say—can be traced back to the
middle decades of the eighteenth century. Before then, economic
change was generally slow (when not precipitated by non-
economic catastrophes); and standards of living tended to
fluctuate violently in the short run and to rise (or decline)
imperceptibly in the long run. Afterwards change became
continuous, evident and systematic—it was part of an indus-
trialization process which was as apparent to contemporaries as
it is to us in retrospect: and national output, population and
incomes per head began to grow, at varying rates it is true, but
with only short-term interruptions. Economic growth—
sustained and perceptible—became part of the normal order of
things.
Associated with the industrial revolution in time, and in a
complex relationship of cause and effect, was a demographic
revolution the mechanics of which are still not fully understood.
One thing is clear however. One of the features that distinguishes
the modern industrial (or industrializing) economy from its
predecessors in the chain of economic development is that it
involves sustained long-term growth in both population and
output.
The rate of growth of population, of course, depends basically
on the rate of natural increase, that is, on the difference between
birth rates and death rates; and there are certain biological and
physical limits to the extent to which these are likely to vary.
In a pre-industrial economy, that is, in a primarily agricultural
community, crude birth rates (i.e. live births per annum per
1,000 of the population) generally range between 35 and 50.
20
THE DEMOGRAPHIC REVOLUTION 21
Within this range, the actual rate will vary according to the
specific characteristics of the community concerned; for
example, according to demographic factors like sex and age-
composition, socio-cultural factors (such as age of marriage and
attitudes to family size), economic factors (such as the demand
for child labour or the costs of having children) and events such
as wars, epidemics and famines. Death rates also tend to be quite
high but normally they are lower than birth rates—the range
being generally between about 30 and 40 per annum. In effect,
therefore, the population of an agricultural community,
undisturbed by epidemics, or wars, or cultural shocks, is
generally characterized by a rate of natural increase of between
5 and 10 per 1,000, so that the population tends to grow at an
annual rate of between one-half of one per cent and one per cent.
Some twentieth-century developing countries have achieved
much higher rates of natural increase (actually between 2 and
3 per cent) because the death rate has been sharply lowered by
the introduction from industrialized economies of advanced
medical techniques. But in the pre-industrial economies of the
eighteenth and nineteenth centuries and before, the normal rate
of natural increase can be assumed to have been restricted to
these fairly narrow limits of 0*5 per cent and 1 per cent per
annum.
In fact, however, the normal rate of natural increase was
recurrently interrupted by sudden dramatic peaks in the death
rate caused by particularly virulent epidemics, or wars, or a
succession of harvest failures. A serious crop failure could double
or treble the normal death rate of the region most closely
affected, and a city struck by plague might expect to lose a third
or a half of its inhabitants. Famines, wars and epidemics tended
indeed to reinforce each other. For diseases that were endemic
in stagnant, highly localized, agricultural communities could
speedily be converted into wide-ranging epidemics in situations
where harvest failures (which inevitably tend to hit some
districts harder than others) produced movements of people
from areas in which food supplies were virtually exhausted to
areas in which they could still be obtained for the price of a
man's labour. In an age when armies lived in camps rather than
barracks, and were expected to live off the land, movements of
troops were a common cause of the spread of infection from one
region or country to another, and deaths from disease associated
with military operations usually outnumbered those incurred in
battle.
By the eighteenth century, however, in several countries of
Western Europe—of which Britain was one—these 'dismal
peaks' in the death rate became less frequent or less violent
(probably both) and the natural tendency of population to
grow—albeit slowly—was able to assert itself. There is also some
evidence to suggest that, at any rate in certain districts, there
was a rise in the birth rate. This could of course have been due
to the same sort of reasons which accounted for the reduction
of the peaks in the death rate. For the sort of crisis which
brought an upward leap in the death rate generally involved
a drop in the number of successful conceptions and a rise in the
number of stillbirths. Anything which reduced the violence or
the frequency of these recurrent catastrophes would tend to
increase the number of live births. What does appear to be
indicated by the evidence is that the population of England and
Wales, which had been fluctuating above and below a level of
no more than 6 million people in the first three or four decades
of the eighteenth century, began to grow, possibly in the 1740's,
and has been growing ever since. For population, as for output,
it is by no means certain that the crucial change in the trend rate
of growth dates from the 1740's, though it is clear that by
the end of the eighteenth century the changes in birth and
death rates had been such as to constitute a demographic
revolution.
Let me say something about the character of the evidence on
which we depend for our discussion of English population
growth in the eighteenth century. Why are we so hesitant about
saying exactly when and why English population began to
grow?
Essentially the answer is that our population statistics are
incomplete. There was no full census of population taken for
England and Wales until 1801 and no official registration of
births and deaths until 1839. True there had been an earlier
count at the end of the seventeenth century in connection with
a tax on births, deaths and marriages. But the data do not
appear to have been nationally collected or aggregated. When
Gregory King made his contemporary estimates of population,
for example, he took the hearth-tax returns as a starting point
and used some of the 1695 parish population assessments to give
1
him an average number of persons per hearth. In any case,
statistics collected specifically for tax purposes are open to
suspicion because there is a positive incentive to evade enum-
eration. Perhaps the fact that the 1695 count was used as an
instrument of tax collection was part of the reason for the
opposition with which all eighteenth-century proposals for a
census were met. A bill for counting people and numbering
marriages, births and deaths and the individuals in receipt of
poor-relief was actually introduced into Parliament in 1753, for
example. Though it weathered violent opposition in the
Commons, where the member for York insisted that 'an annual
register of our people will acquaint our enemies abroad with our
weakness and a return of the poor's rate our enemies at home
with our wealth ',2 it was rejected by the Lords, so that informed
observers were still arguing whether the population of England
and Wales was growing or declining when the first census was
taken in 1801. By then the population was growing at an
unprecedented rate and almost as fast as at its all-time peak.
The figures we now use for English population trends
between 1700 and 1800 are, without exception, estimates. They
are based largely on records of baptisms, burials and marriages
which John Rickman, the first Director of the Census got the
parish clergy to extract for him from the church registers at
decade intervals through the eighteenth century. Being extrac-
ted at decade intervals they may reflect the abnormal circum-
stances of particular years, and without an annual series of
estimates we cannot say exactly when the upward trend began.
Being based on the registers of the Anglican clergy, they omit
an unknown proportion of nonconformists, and moreover a
proportion which cannot be assumed to have remained constant
through time or as between districts. A fall in the baptisms,
marriages and burials appearing in the parish records, for
example, might reflect an increase in nonconformity, or a
disinclination to submit to registration procedures, rather than
a fall in births, marriages and deaths. Nor were the parish
registers themselves always complete—there are tales of their
pages being used for pot-holders or wrapping-paper or fire-
1
D. V. Glass, 'Gregory King and the Population of England and Wales at the end
of the Seventeenth Century', Eugenics Review (1946).
2
Quoted by A. J. Taylor, 'The Taking of the Census', British Medical Journal (7 April
1950. P- 7i5-
lighters; neither were they always legible. Nevertheless, these

are the data which historians have converted to estimates of
total population by making reasoned assumptions concerning
the relationship between recorded baptisms, marriages and
burials on the one hand, and actual births, marriages and deaths
on the other. Rickman, for example, derived his eighteenth-
century population estimates by applying a standard coefficient
(based on nineteenth-century census results) to an average of
the baptisms and burials and marriages data for each year.
Other investigators have chosen to depend on one series rather
than the other two, and there are a variety of possible coefficients,
depending on which later census one takes as a basis for
estimate, and what adjustments are made to bring them into
line with eighteenth-century conditions.
Consequently we are faced with a variety of possible series
for English eighteenth-century population, some of which are
more subtle and complex in their assumptions than the others,
but none is authoritative.1 Most of them suggest that the
upward trend in English population can be dated from the
1740's, but it is generally agreed that the initial upsurge was
a relatively modest affair—not greater than many earlier
population upsurges which had been speedily cancelled by a
single peak in the death rate. The difference was that the growth
that appears to date from the 1740's was not reversed and indeed
it accelerated to unprecedented levels in the 1780's and went
on accelerating to a peak rate of growth in the decade 1811-21.
The traditional explanation of the upturn is that there was
a fall in the death rate, beginning in the 1740's or thereabouts,
which (it is said) was particularly marked for the infant
age-groups. This would, of itself, produce a continuing rise in
the rate of natural increase when the surviving infants grew up
and inflated the child-bearing age groups. But it was then
reinforced, so the explanation goes, by the continuing decline
in the death rate due to improved medical knowledge and skill
and by an upward movement in the birth rate due to rising
standards of living and to the vigorous demand for labour in
the early stages of the industrial revolution, from, say, 1760 or
1770 onwards. Certainly the burial figures show a spectacularly
high mortality in the 1730's which is sometimes associated with
the gin-drinking age—particularly in London—and they fall to
1
See Mitchell, Abstract of British Historical Statistics, p. 5.
distinctly lower levels in the 1750's. Moreover there is no doubt

that when the death rate, is high, as it was in the eighteenth
century, a relatively slight fall, if it is sustained, is capable of
setting up a cumulative process of population change.
A considerable controversy has grown up around this ex-
planation. For one thing the view that the process of population
growth was set off by a decline in the death rate has been
challenged by those who argue that there is at least as much
evidence for an initiating rise in the birth rate. For another, the
argument that the improvement in medical conditions was
adequate to account for an appreciable fall in the death rate
has been challenged by medical historians. For another, the
view that working-class standards of living were rising during
the early stages of the industrial revolution has been challenged
by statisticians, who point to falling real wages as prices soared
in the fourth quarter of the eighteenth century. Finally, it has
been argued that an upsurge in the 1740's could be simply
explained as a reaction, a compensatory adjustment, to the
abnormally high mortality rates of the 1730's and that what was
really revolutionary in the eighteenth-century population trend
was the failure of birth and death rates to revert to ' normal'
pre-industrial levels after the compensation was complete.
The first question is whether it was the death rate or the birth
rate that triggered off the increase after about 1740. Professor
Habakkuk's analysis of the evidence1 has demonstrated that it
is open to other explanations than those traditionally advanced
by the economic historians. In particular, for example, it might
be explained by postulating a fall in the age of marriage due
to better economic conditions and wider economic opportunities
leading to a rise in the birth rate. There seems to be plenty of
evidence for an improvement in economic conditions in the
crucial decades. Contemporary writings by informed observers
suggest strongly (1) that standards of living among the labouring
poor were improving in the decades before the industrial
revolution began, and (2) that there was a shortage of labour
at that stage. Malthus wrote, for example, that
During the last 40 years of the 17th century and the first 20 of the
18th, the average price of corn was such as, compared with the wages
1
H. J. Habakkuk, 'English Population in the Eighteenth Century, Economic History
Review (1953).
of labour, would enable the labourer to purchase with a day's

earnings, two thirds of a peck of wheat. From 1720 to 1750 the price
of wheat had so fallen, while wages had risen, that instead of two thirds
the labourer could purchase the whole of a peck of wheat with a day's
labour.1
Adam Smith took a similar view. Overseas trade was expanding
and so was the textile industry—the major British manufactur-
ing industry of the day. The period 1730-55 was characterized
by a remarkable run of good harvests hardly paralleled before
or since. At the same time, the evidence that the decline in
mortality affected the infantile age-groups most strongly is far
from conclusive and without this presumption it is difficult to
claim that the later acceleration in the birth rate hinged on the
decline in the death rate.
In effect, the argument is that the fall in the death rate which
undoubtedly occurred between 1730 and 1760 was a reaction
to a period of high mortality; that the greater fall suggested by
the burial statistics from 1780 to 1820 was exaggerated by
serious deficiencies in the system for registration of deaths; 2 and
that the long-term cause of the increase in population was due
to a sustained increase in the birth rate. This in its turn can be
attributed to the removal of the two economic checks—first to
the abnormally prolonged run of good harvests during the
period 1730-55. Good harvests meant cheaper grain and a
stronger demand for labour to reap the crops: they thus
permitted an earlier age of marriage and larger families. Later
in the century the pressure for larger families was increased by
the economic opportunities for children in industrial employ-
ment and by the system of family allowances involved in the
Speenhamland arrangements (see below p. 152). The increasing
urbanization of the eighteenth century may also have had an
impact on the age of marriage, and hence on the birth rate, for
there is some evidence to suggest that women tended to marry
earlier in the towns than in the country.
Until sufficient evidence is unearthed—for example in the
direct investigations into parish registers which are steadily
broadening our knowledge of past changes in mortality, fertility
1
T. R. Malthus, Principles of Political Economy (1838), p. 228.
2
This is the conclusion suggested by a careful study of the records for 1781-1850. See
J. T. Krause, 'Changes in English Fertility and Mortality 1781-1850', Economic
History Review (August 1958).
and age of marriage—the question whether it was a rise in the
birth rate or a decline in the death rate that was effectively
responsible for the upward surge in population that dates from
the mid eighteenth century must remain open. No one denies
that both factors were operative. What remains open to doubt
is which of the two ratios shifted first to a new long-run position.
A study of the Nottingham registers by Professor Chambers
seems to support Professor Habakkuk's view that the fall in the
death rate was not so much a steady decline due to improved
medical, social and economic conditions, but a sharp and
temporary reaction to a period of high mortality. Part of the
rationale of this argument is that those who survive a period of
high mortality tend to be more resistant on the whole and their
mortality rates are likely to be abnormally low. Of the
Nottingham death rate Professor Chambers wrote:
It is not a question. . .of a steady decline under the influence of the
ameliorating factors of diet and environment, but rather of a sudden
and temporary plunge downwards as a result of the absence of a factor
which had made the preceding period one of exceptionally high
mortality, followed by a return almost to the death rates of the
pre-epidemic period.
In other words: 'As far as Nottingham was concerned the age
of massacre by epidemic was over."
Against the view of the primacy of the birth rate in causing
the eighteenth-century population upsurge it has been argued2
that when birth and death rates are both high, as was the case
for eighteenth-century England, a fall in the death rate is a more
plausible explanation of a sustained rise in population than a
rise in the birth rate. This is because a high death rate due to
infectious disease is uneven in its incidence as between age-
groups : it carries away infants and young children more rapidly
than adults; and in conditions where the incidence of disease
is high one would expect most of the effects of an increased birth
rate to be nullified immediately by an increase in the death rate
due to an expansion of the age-groups with a high death rate.
Although arguments linking a rising level of economic
opportunity to earlier marriages and a reduction in the average
!
J . Chambers, 'Population Change in Nottingham, 1700 i8oo\ in L. Pressnell,
Studies in the Industrial Revolution (i960), pp. 116 and 110 respectively.
2
By T. McKeown and R. G. Brown,' Medical Evidence Related to English Population
Changes in the 18th Century', Population Studies (1955)-
number of months between successive births are persuasive, the
hard evidence for either a substantial decrease in the average
age of marriage, or an increase in fertility within marriage, is
still limited. Wrigley's examination of the Colyton parish
registers for example indicates that in this small Devonshire
village the brides of the period 1770-1837 were on average
younger and more fertile than women who married in the
period 1720—69.l Hollingsworth's study of the English peerage
also shows a rise in fertility for the eighteenth century, but no
clear fall in the age of marriage for this group—possibly because
its women already tended to marry younger than their coun-
terparts in the rest of the population.2 Finally, the argument
that an increased demand for labour leads directly to an
increase in the birth rate, rather than indirectly through a
change in the marriage rate or age, implies some degree of family
planning and hence of contraception: and of this there is no
evidence at all for eighteenth century England. On the other
hand, recent research into the demographic behaviour of
today's less-developed countries, as well as an increasing volume
of evidence on past practice now being assembled from parish
registers in Western Europe, indicates that pre-industrial com-
munities have been capable of postponing marriage, and re-
stricting births within marriage, in times of economic pressure.
What does seem to stand out fairly conclusively from the
evidence and the analyses carried out so far by economic and
social and medical historians is that there was a sharp reduction
in the death rate dating from the decade or so before 1750 (due
almost certainly to a reduction in the incidence of epidemics),
and an increase in the birth rate in the period after 1750 (due
partly at least to the secondary effects of the earlier reduction
in infant mortality). There is also some evidence of a pre-1750
increase in the birth rate, but, since this is based on baptism
data, it could equally well have been due to a decline in
non-conformity, so it must be regarded as suspect.
Why the epidemics diminished is not fully established. As far
as the Plague is concerned, the reasons seem to lie partly in
'an obscure ecological revolution among rodents', and partly
1
E. A. Wrigley,' Family Limitation in Pre-industrial England', Economic History Review
(1966).
2
T. H. Hollingsworth, 'The Demography of the British Peerage', supplement to
Population Studies (1964).
in a gradual improvement in standards of living and social

organization. Bubonic plague was a flea-borne disease of rats—
the black ship rats who travelled on the caravan routes from
Northern India and were shipped with the grains they infested
to Western Europe and thence to English ports. As living
standards rose so that wattle and daub walls were more and
more replaced by brick, thatched roofs by tiled, piles of rushes
or straw by carpets, and when systematic scavenging of the
streets shifted piles of rat-breeding rubbish, the disease was
bound to decline. The Great Fire of London and the subsequent
rebuilding of the city may have protected that major urban
concentration by drastically reducing its rat colonies, and
indeed the Great Plague of 1665-6 was the last serious outbreak
in Britain. But, so it has been argued, it was the displacement
of the small domesticated black rat with its predilection for
settling in human habitations and its free-wandering flea, by the
grey-brown field or sewer rat with its outdoor habits and its
nest-loving flea, that eventually freed Europe from its recurrent
susceptibility to Plague.1 More important, however, than the
triumph of the field rat (which is said to have reached England
by sea circa 1728) was probably the development in the later
seventeenth century of the sea trade between Europe and India
'which abolished the caravan routes for merchandise from the
East across Asia Minor and with it the "rodent pipe line'"
which brought the disease-carrying flea from India to the
Levant.2
Plague, of course, was only one factor in the high mortality
rates of pre-industrial times. It may be that we must look to
similar ecological changes to explain the diminution of other
kinds of endemic or epidemic disease. The decline of malaria,
for example—the treatment of which was still one of the most
important functions of a seventeenth-century physician—can
be attributed to the reduction in the numbers of the mosquito
carrier due to better domestic hygiene, swamp drainage and
perhaps to climatic changes. Other investigations have linked
the reduction of the 'dismal peaks' in the death rate with the
run of good harvests, which reduced the movements of distressed
peoples and improved the basic living conditions of the mass of
the population. It is certainly difficult to over-emphasize the
1
L. Fabian Hirst, The Conquest of Plague (1953).
2
J. F. D. Shrewsbury, History of the Bubonic Plague in the British Isles (1970).
3O THE FIRST INDUSTRIAL REVOLUTION
contribution of good harvests to standards of living and pro-
ductivity in an agricultural community. Others again have
argued that people were becoming more aware of the import-
ance of sanitation and hygiene; if they were, this kind of
gradual development could have brought with it a steady, if
barely perceptible, improvement in the expectation of life.
One view that used to be prevalent and now seems to have
been largely discredited is that the improvement in the death
rate was a consequence of advances in medical knowledge.1 It
would appear that there were no specific improvements in
medical techniques or knowledge which could have contributed
substantially to a reduction in the eighteenth-century death
rate. Vaccination did not become general until the nineteenth
century, and in any case the evidence is that the proportion of
deaths due to smallpox did not vary through the eighteenth
century. 'Surgery had an almost inappreciable effect on vital
statistics until the advent of anaesthesia and antiseptics in the
nineteenth century.' 2 Hospitals and dispensaries were more
likely to spread disease than to check it. People who went to
hospital in the eighteenth century often died there, generally
from some disease other than that with which they were
admitted. As late as the 1870's the senior surgeon at University
College Hospital was warning his surgical students that 'a
woman has a better chance of recovery after delivery in the
meanest poorest hovel than in the best conducted hospital
furnished with every appliance that can add to her comfort and
with the best skill that a metropolis can afford'.3 There seems
no doubt that doctors learned a good deal about the causes of
disease in the eighteenth century, a development which was
probably reflected in the gradual adoption of more hygienic
methods of treatment. This is thought to have produced a
substantial reduction in maternal mortality, and indeed it may
have done, though it is obviously difficult to prove this
hypothesis; and it is very doubtful whether the majority of the
population had access to medical practitioners who were any
wiser than their medieval predecessors.
1
The medical evidence has been extensively reviewed in McKeown and Brown,
' Medical Evidence' (1955). But see P. E. Razzell,' Population Change in Eighteenth
Century England; A Reinterpretation', Economic History Review (1965) for evidence
that inoculation against smallpox may have an appreciable effect on eighteenth
2
century mortality rates. McKeown and Brown, 'Medical Evidence', p. 121.
3
J. E. Erichsen, On Hospitalism and the Causes of Death after Operations (1874), p. 43.
In effect then, the medical historians have returned to the
economic historians the responsibility for explaining the con-
nection between the demographic revolution and the industrial
revolution. The latter have traditionally attributed the fall in
the death rate, or the rise in the live-birth rate, or both, to the
progress of medicine. The former find no evidence of medical
progress of a kind which could justify this explanation and
conclude instead that improvements in the standard of living
must have increased the people's resistance to infectious disease
and hence reduced the incidence of epidemics.
The question whether the standard of living rose and to what
extent has also been the subject of controversy. In chapter 15
I shall examine in more detail the evidence for the change in
the standard of living during the early stages of the British
industrial revolution. For the moment, however, I propose to
take a longer view of the problem in order to make the point
that in relating the standard of living to the population upsurge
it matters a good deal which period or subperiod we have in
mind.
I have already referred to the contemporary evidence
indicating that the labourer's standard of living was relatively
high in the mid eighteenth century, that is, between the 1730's
and 1760's.1 Good harvests were reflected in low meat and grain
prices and these meant both cheap food and low costs for the
numerous industries processing agricultural products which are
characteristic of a pre-industrial type of economy. In the 1750's
England was a grain-exporting country, and most of its indus-
trial raw materials outside the metal industries were home-
produced agricultural products. If these primary products were
cheap it meant that the return per unit of human effort was
quite high. The evidence that standards of living for the mass
of the population were quite high between about 1730 and
1760—higher, that is, in relation to past periods—is rather
convincing.
But later on the evidence becomes a great deal less convincing.
The long run of good harvests was broken, and indeed in the
last three or four decades of the eighteenth century it can be
said that there was an abnormally high incidence of bad
harvests. The Seven Years War, the American War of Indepen-
dence and the French wars all disrupted overseas trade and
1
pp. 10-11 above.
created industrial and commercial distress and unemployment.

The rising population began to press on food supplies and prices
began to rise. At the end of the century a marked price rise was
converted by all-out war into a rapid inflation. Professor Phelps
Brown's index of the price of a typical basket of consumers'
goods shows no price increase between around 1730 and 1760,
a rise of nearly 40 per cent between 1760 and 1792 (on the eve
of the French wars) and a doubling of prices between 1793 and
1813 when the war inflation reached its peak.1
Certain money wages—the wages of weavers, for example,
who were rendered scarce by technological progress in the
spinning section of the cotton industry—rose even higher than
food prices. But for the most part the rise in money wages lagged
behind the increase in prices, poverty became an acute problem,
food riots were common and it is very difficult to justify the view
that standards of living of the mass of the population were rising
over the period 1780—1815. Moreover, in so far as industriali-
zation led to urbanization it may have tended to worsen the
environment of many people and to push up the death rate, for
the urban death rate was generally higher than the rural death
rate. In London—'the great wen'—there was a huge excess of
burials over baptisms for most of the eighteenth century.
On the other hand the poor harvests which recurred at
relatively frequent intervals in the later eighteenth century were
no longer associated with violent upturns in regional or national
death rates. Probably the most important reason for this is the
fact that standards of economic and social organization had
improved substantially over the century. There had been im-
provements in communications (better roads, river navigations
and canals), in banking (permitting an easier flow of credit
facilities in times of distress) and in commerce (opening up
backward regions to trade and economic opportunity). The
spread of root crops, such as the potato, which were less
vulnerable than grain to climatic variations (or not as susceptible
to the same bad weather) provided some regions with a useful
hedge against total subsistence failure. At the same time there
was evidence of an increasingly humane and responsible attitude
1
E. H. Phelps Brown and Sheila V. Hopkins, 'Seven Centuries of the Prices of
Consumables Compared with Builders' Wage Rates', Economica (1956). See also
E. B. Schumpeter,' English Prices and Public Finance 1660 1822', Review of Economic
Statistics (1938), for another price index which leads to similar conclusions.
to the vicissitudes of the poor, which was associated both with

a more efficient administration of the poor law and, in some
areas, with more effective techniques of famine relief. James
Anderson's account of the disastrous 1782 Aberdeenshire har-
vest, for example, attributes to a deliberate, concerted effort by
local landowners to conserve grain and to finance food imports
by charitable subscription, the fact that the usual concomitants
of harvest failure—famine, emigration and ' political convul-
sions'—were then avoided.1 In such circumstances as these,
harvest failure and trade depression would have been less lethal
in their impact on the worst-affected areas and social classes
than had been usual in earlier decades, when harvest failure
meant starvation or near-starvation for some and increased
incidence of disease for many.
What can we say then, in sum, about the relationship
between the demographic revolution and the industrial revolu-
tion, about these two significant breaks in the trend of British
economic development which took place in the eighteenth
century—the break in the long-run trend of population and the
break in the long-run trend of output? We may begin by
sketching briefly the course of English population and output
growth in the eighteenth and early nineteenth century.
Between about 1700 and about 1741 the population of
England and Wales seems to have been virtually stagnant at
between about 5*8 million and about 6 million people. From 1741
to 1751 it may have grown by about 3^ per cent over the decade;
between 1751 and 1761 the rate of increase accelerated—
probably to about 7 per cent per decade, a rate which it held,
more or less, for a further decade. Then it accelerated to nearly
10 per cent in the 1780's and about 11 per cent in the 1790's
and reached a peak of about 16 per cent in the second decade
of the nineteenth century.
We cannot describe precisely the course of death rates and
birth rates because the figures of burials and baptisms are not
available annually for most of the eighteenth century. It is
generally agreed, however, that the death rate reached its
highest levels in the first half of the eighteenth century and that
the birth rate reached its peak somewhere within the period
1780-1820. When these peaks occurred is further in doubt
1
J a m e s Anderson's account is cited in M . Flinn (ed.), Scottish Population History (1977),
pp. 12-13.
T H E
34 FIRST INDUSTRIAL REVOLUTION
because year-to-year changes in burials and baptisms are an

uncertain reflection of the year-to-year changes in deaths and
births. Estimates made by Farr, a nineteenth-century Director
of the Census, and reprinted in the General Report of the Census
of 1871, suggest that English birth rates per 1,000 of the
population probably reached a peak of about 377 in the 1780's.
Expressed in terms of the percentage of women aged 20-40 this
represents about 259 per cent and it seems to have remained
between 25 and 26 per cent until the 1820's and 1830's, when
it slumped quite sharply to reach 216 per cent in 1851.1 On
the assumption that birth rates and death rates eventually tend
to adjust to one another, so that the rate of natural increase does
not stay explosively high, we can say that a high death rate tends
to be biologically compensated for by a high birth rate and that
a low death rate tends to generate a fall in the birth rate. But
of course the adjustment—the 'demographic transition' as it is
generally called—is rarely immediate. The birth rate reacted
against the high pre-1750 death rate by rising post-1750, that
is to say, and against the falling death rate 1780-1820 by falling
post-1820.
Attempts to assess the pattern of output growth suggest that
in the 1740's when the upsurge of population seems to have
begun there was an equally marked upsurge in total output. For
20 years the rate of growth of total real output is estimated to
have averaged about 1 per cent per annum (compared with
under half of 1 per cent in the preceding 30 years or so), and
although the pace slackened in the following two decades it
seems still to have been twice the rate of the early part of the
century. In the 1780's the rate again accelerated, so that by the
turn of the century it was probably running at near 1 -8 per cent
per annum.? These, it should be noted, are estimates of the rate
of growth of total national output. For the upsurge of the 1740's
the evidence of an increase in output per head is largely confined
to the reports of contemporaries. It does not show up in the
national-income estimates. But there is certainly no evidence of
1
See also the estimates by T. H. Marshall in 'Population and the Industrial Revolu-
tion', reprinted in E. H. Carus-Wilson, Essays in Economic History, vol. i (1954).
Professor Marshall's peak as a percentage of women aged 20-40 is in 1811 rather
than 1791 but the general trend of relatively high birth rates 1780 1820 and a slump
thereafter is as clear in his estimates as in Farr's.
2
Deane and Cole, British Economic Growth (1962), pp. 79-82. But see N. F. R. Crafts,
'English Economic Growth in the Eighteenth Century', Economic History Review
(1970), for a critical re-examination of these growth estimates.
decline and the presumption in favour of some increase is quite
strong. During the next population upsurge, which we can
date from the 1780's, the national-income evidence suggests a
tendency for incomes per head to increase, though contemporary
reports and wage data make it obvious that substantial sections
of the population were, if not worse off, certainly no better off
than before. This is the period to which Rostow has ascribed his
'take-off' stage. Certainly it was a period of great change and
innovation. Even if wage-earners' standards of living did not rise
appreciably overall, profits almost certainly soared and there
were important changes in economic organization, structure
and productivity.
It is clear that there was a complex two-way relationship of
cause and effect shaping these two trends—population on the
one hand and output on the other—even if it is not clear exactly
what form that relationship took at all times. Both trends were,
it is true, determined in part by factors that could reasonably
be regarded as independent: in the case of population, for
example, by essentially non-economic factors which helped to
reduce the long-term death rate or raise the long-term birth
rate; and in the case of output, by such factors as the growth
of foreign markets and the widening of the technological
horizon. It is the interaction between the two trends that is of
especial interest, however. It seems reasonable to suppose that
without the growth of output dating from the 1740's the
associated growth in population would eventually have been
checked by a rise in the death rate due to declining standards
of living. It seems equally probable that without the population
growth which gathered momentum in the second half of the
eighteenth century, the British industrial revolution would have
been retarded for lack of labour. It seems likely that without
the rising demand and prices which reflected, inter alia, the
growth of population, there would have been less incentive for
British producers to expand and innovate, and hence that some
of the dynamism which powered the industrial revolution would
have been lost. It seems equally likely that the expanding
employment opportunities created by the industrial revolution
encouraged people to marry and to produce families earlier
than in the past, and that they increased the average expectation
of life.
It is important in the last analysis not to oversimplify the
story. 'For those who care for the overmastering pattern', as
Professor Habakkuk has pointed out,' the elements are evidently

there for a heroically simplified version of English history before
the nineteenth century, in which the long-term movements in
prices, in income distribution, in investment, in real wages and
in migration are dominated by changes in the growth of
population.' 1 But there were other factors to be considered in
combination with the increase in the labour force. The fact was
that the new technology was introduced into a country which
had labour, land and capital resources in reserve. There was still
waste land and common land in England that could be more
intensively cultivated: there was a fund of capital that had been
earned in the overseas trade of the eighteenth century.
Industrialists could rely on getting ample supplies of unskilled
labour. Farmers could afford to adopt large-scale labour-
intensive methods of cultivation when both urban and rural
populations were expanding; for this provided them with
expanding markets and an ample labour force. But without
some slack in other resources—in land and capital—the growth
of population might have come up rapidly against an output
ceiling. With this additional slack it provided a positive incentive
to economic change and growth.
1
H. J. Habakkuk, 'The Economic History of Modern Britain', Journal of Economic
History (December 1958).
CHAPTER 3
THE AGRICULTURAL
REVOLUTION
Students of economic growth in today's underdeveloped coun-

tries are well aware of the fact that the route to sustained
economic growth lies through an industrial revolution. What
is still a matter of controversy in connection with the strategy
of industrialization is the role that agriculture should play in
the process. Opinion ranges from those, at one extreme, who
believe that all that is required of agriculture is that it should
efficiently contract and so release labour and resources for
modern industry: and, at the other extreme, those who claim
that a revolution in agricultural techniques and methods of
organization is an essential prerequisite to modernization of the
manufacturing and transport industries. Professor Rostow, for
example, in elaborating his theory of the stages of economic
growth has claimed that 'revolutionary changes in agricultural
productivity are an essential condition for successful take-off'.1
According to this view it is on agriculture that the pre-industrial
economy must depend for the additional food, the raw materials,
the markets and the capital, which permit industrialization to
proceed. In this controversy the historical experience of the first
country to undergo an industrial revolution assumes a special
topical interest.2
It is well known that the British industrial revolution was
associated with an agricultural revolution. What was the
character of this association? To what extent did it precede,
reinforce or arise out of the process of British industrialization?
There were four salient features of the British agrarian
revolution. First of all it involved farming in large-scale con-
solidated units in place of the medieval open fields cultivated in
1
2
For a valuable recent assessment of the agricultural revolution published after the
first edition of this book appeared, see J. D. Chambers and G. E. Mingay, The
Agricultural Revolution 1J50-1880 (1966).
37
discontinuous strips by peasants with rights of pasture, fuel and

game on the overstocked common. Secondly it involved the
extension of arable farming over heaths and commons and the
adoption of intensive livestock husbandry. Thirdly it involved
the transformation of the village community of (largely) self-
subsistent peasants into a community of agricultural labourers
whose basic standards of living came to depend more on the
conditions of national and international markets than on the
state of the weather. Fourthly it involved a large increase in
agricultural productivity, that is, in the volume of output
produced per unit of the full-time labour force in agriculture.
These characteristics developed gradually over a long period
of time and appeared at widely different periods in different
regions. What we need to do in order to relate them to the
industrial revolution is to identify the crucial period of trans-
formation, to be able to say when the significant changes in
agricultural practice and organization and attitudes took place.
Can we specify these significant changes and can we date them
narrowly enough to be able to say when the agricultural
revolution effectively occurred in Britain? Can we say whether
it preceded, accompanied, or followed the developments which
formed the nub of the industrial revolution proper and which
can be tentatively attributed to the period 1780 to 1850? These
are difficult questions to answer at a national level because the
regional experience was so varied. It may, however, be possible
to shed some light on the question when the English agricultural
revolution occurred, by reviewing three related developments
on which it largely depended: (1) the adoption of new techniques
of production, (2) enclosure, and (3) changes in entrepreneurial
attitudes.
I. NEW TECHNIQUES OF PRODUCTION
The essential features of the new techniques of production which
characterized the agrarian revolution on the light soils of
England were constant tillage, new crop rotations and a closer
association of crops and stock. Jethro Tull's method of drilling
wheat and roots in straight lines sufficiently far apart to permit
a horse-drawn hoe to cultivate the rows between them was the
basis of the new techniques of constant tillage. The seed drill
was built in 1700 and the method was publicized extensively
in the early 1730's. It was facilitated by the Rotherham tri-
THE AGRICULTURAL REVOLUTION 39
angular plough (patented in 1730), which permitted a rapid

and effective turning of the soil by means of a team of two horses
and one man instead of the traditional, slow, rectangular plough
drawn by four or six or eight oxen and attended by an ox-driver
as well as a ploughman. Experimental threshing machines were
being made in the 1780's. More important, however, than
mechanization in raising agricultural productivity during the
period of the industrial revolution were the improvements in the
design of hand tools and the trend towards earlier cutting of
grain which developed over the period 1790-1870. Dr Collins
has described these changes as amounting to a revolution in
hand-harvesting techniques which had been virtually un-
changed since the sixteenth century.1 They represented the
first significant steps towards the reduction of manual labour
in farm operations in Britain.
The abandonment of the older forms of crop rotation in-
volving frequent fallow periods (as often as once every three
years in some areas), in favour of legume rotation and field-
grass husbandry, both extended the area under effective crop
and provided the winter foods for livestock. Seed-grasses were
recuperative crops; turnips and potatoes were clearing crops:
between them they permitted the soil to be cropped continuously
without fear of exhaustion and they permitted livestock to be
kept in health throughout the winter. It was no longer necessary
to leave land uncropped to maintain its fertility and it was worth
while investing in valuable stock with the object of improving
the breed. Moreover stock no longer had to be grazed exclusively
on overstocked natural pastures but could contribute to and
receive benefit from the new rotational techniques. Livestock,
which made profitable use of hay and roots, added by its
manurial residues to the fertility of the land on which it was
folded. Finally, the new techniques permitted farmers to diver-
sify their output and hence to reduce the risks inherent in the
perennially unseasonable English climate. Those who went in
for the new mixed farming had a chance of offsetting the losses
incurred in a disastrously wet summer, and a bitterly cold
winter, by a high meat and milk yield on the one hand or a good
corn and straw season on the other.
It is certain that these innovations must have greatly improved
1
E. J. T. Collins, 'Harvest Technology and Labour Supply in Britain, 1790-1870',
Economic History Review (December 1969).
the aggregate production of the agricultural industry from a

given unit of land or labour wherever they were introduced. The
problem is to decide when they made an effective contribution
to national agricultural output as a whole. When did the new
crops, the new rotations, the new machines and the new breeds
of stock become general?
On this as on many other issues economic historians used to
pronounce much more confidently in the past than they do
today. Fabulous fortunes were said to have been made by the
innovating farmers. A formidable importance used to be, and
sometimes still is attached, for example, to the turnip and to the
efforts of its most famous advocate, 'Turnip Townshend'.
Professor Ragnar Nurkse, for example, wrote:
Everyone knows that the spectacular industrial revolution would not
have been possible without the agricultural revolution that preceded:
and what was the agricultural revolution? It was based mainly on the
introduction of the turnip. The lowly turnip made possible a change
in crop rotation which did not require much capital, but which
brought about a tremendous rise in agricultural productivity. As a
result more food could be grown with much less man-power. Man-
power was released for capital construction.1
In fact there is no evidence that the cultivation of the turnip
(which is a labour-intensive crop) involved any saving in
labour, nor indeed that roots or clover were in general use as
field crops before the early nineteenth century. Doubt has even
been thrown on the extent of the improvements achieved by the
more famous of the farming innovators either in raising the
output of their own estates or in immediately encouraging
imitators.2 Most of the new methods could not be effectively
introduced on the open fields, which it took the enclosure
movement of the late eighteenth and early nineteenth centuries
to eliminate from the English farming scene, and they had to
be adapted to local soil conditions. It took until the 1820's before
the Rotherham plough, which has been described as 'the
greatest improvement in plough design since late Iron age and
Romano-British times', could work in most districts better than
1
R. Nurkse, Problems of Capital Formation in Underdeveloped Countries (1953), p. 52.
2
R. A. C. Parker, 'Coke of Norfolk and Agrarian Revolution', Economic History Review
(December 1955). See also G. E. Fussell's introduction to Lord Ernie, English Farming
Past and Present (1961).
1
the traditional types. The fact is that most of the tenant
farmers, who worked perhaps 80 per cent or more of the
cultivated acreage of the country, had neither the incentive nor
the capital to experiment, and even the richest and most
efficient large landowners hesitated, for political and social
reasons, to introduce labour-saving machinery into rural areas
depressed by chronic under-employment. In any case, the
pressure on labour came at harvest time and there was little to
be gained by economizing in labour at other times. Moreover,
in spite of the genuine enthusiasm for agricultural progress and
the wealth of printed communications that existed in the second
half of the eighteenth century, it is doubtful whether the
majority of farmers became acquainted with the new technology
until they saw it in action on a neighbour's farm. It has been
estimated that the pace of advance of new methods was not more
than a mile a year from their place of origin.2
Above all it should be remembered that agriculture, more
than any other industry, differed in character and historical
experience from region to region. We cannot assume that
techniques which were shown to be effective in one region were
readily adapted to the different conditions of other regions. Nor
indeed is it easy to establish that the example of the enterprising
improvers was generally followed even within their own regions.
Observant contemporaries like Arthur Young have described
one improving farmer after another: but we cannot say how far
their behaviour was typical. Often there is cause to believe that
it was the atypical case which contemporaries found interesting
enough to record. These are some of the reasons for the doubt
which still surrounds this issue. Many of the new techniques of
the eighteenth century were suitable only to the light sandy soils
and could not be adopted in regions of heavier soils until the
use of cylindrical tiles and the application of steam to pumping
machines made it possible to drain the clay soils and the fens
in the middle of the nineteenth century. Much more research
at the regional level of detail will be necessary before we can
generalize conclusively on the impact of the new agricultural
techniques on national agricultural productivity during the last
1
F. G. Payne, 'The British Plough: Some Stages in its Development', Agricultural
History Review (1957).
2
C. Singer, E. J. Holmyard, A. R. Hall and Trevor Williams, History of Technology, vol.
iv (1946), p. 40.
half of the eighteenth century and the first half of the nineteenth
century.
2. ENCLOSURES
To some extent we can gauge from the parliamentary records
the pace at which the enclosure movement progressed, though
here again we should bear in mind two qualifications to the
data. The first is that private enclosure had been going on since
Tudor times and before. It was not until the mid eighteenth
century that parliamentary enclosure became the usual method
of consolidating land holdings. The second is that although
enclosure may have been a necessary condition of agricultural
improvement it was not a sufficient one. If it removed the
restrictions on technological Change inherent in the open-field
system, it did not of itself ensure the adoption of the new
techniques of production for the market and the higher prod-
uctivity they entailed. Some of the smaller farmers who received
an allocation under an Enclosure Act were rendered too poor,
by the legal and fencing costs in which they were unwillingly
involved, to invest much on improving their holdings or in
buying machinery or stock. Some of the larger farmers made
less intensive use of their newly acquired wastes and commons
than the cottagers and squatters who had used them to support
families. There is evidence that standards of food consumption
deteriorated for the rural poor in the second half of the
eighteenth century to a predominantly bread and cheese diet
because' the system of enclosures had taken away their pasturage
and the land where they collected the fuel for cooking their hot
meals'.1 At the same time their opportunities for adding to their
larder by trapping or snaring or fishing were reduced, for on
the enclosed lands landowners invoked savage game-laws and
protected their preserves with man-traps and spring-guns. Meat
virtually disappeared from the tables of the rural poor.
Bearing these qualifications in mind, therefore, can we say
when the enclosure movement developed a revolutionary
momentum? It is difficult to be conclusive about this. It has
been estimated that in 1700 about half the arable land of the
country was still cultivated on the open-field system. By 1820
there were 'only half a dozen English counties of whose area
more than 3 per cent remained to be enclosed from the open-field
1
J. Drummond and A. Wilbraham, The Englishman's Food (1957), p. 206.
state by Act of Parliament: and in these a fair part of the
remaining work was done before 1830 V It may reasonably be
supposed that private enclosure (that is, enclosures achieved by
private negotiations to buy out the rights of freeholders and
tenants) was going on throughout this period. It had been going
on for centuries. But in villages where there were a large number
of freeholders the landlord who wanted to consolidate his
holdings had to make his agreements with a large number of
individuals, and his prospects of doing so privately grew less
promising as the eighteenth century went on, for two reasons:
first because it was the most difficult cases that had survived the
early centuries of private negotiation and pressure, secondly
because the high prices of corn which prevailed in the second
half of the eighteenth century made it worth the occupier's while
to hold on to even a small strip of the open field.
The price of corn was the crucial factor which determined
the eagerness of the landlord to consolidate and the readiness
of the peasant to relinquish his holding. In the first half of the
eighteenth century corn prices were generally low and in these
circumstances the pressure to enclose was generally rather weak.
The pace of parliamentary enclosure was slow and generally
steady over this period, 1700-60, and it is significant that 'the
only years that show distinct activity in Parliament are 1729-30
and 1742—3—both periods following deficient harvests and
relatively high prices of food'.2 It may reasonably be presumed
that private enclosure also went on fairly steadily as land
exhausted by the open-field system came on to the market.
Often the arable open fields were enclosed because they were
too exhausted to give even subsistence crops of corn, and then
they were put under grass.
In the second half of the eighteenth century, however, as
population rose and cities grew, the price of corn rose and the
pattern changed. It is reasonable to suppose that private
enclosures proceeded more slowly than in the period before
1760, because the incentives to resist dispossession were strong
when the price of food was high. Would-be enclosers had to find
ways of enforcing compliance. Certainly the pace of parlia-
mentary enclosure accelerated markedly. It is worth distin-
guishing between the Acts concerned with the enclosure of
1
J. H. Clapham, An Economic History of Modern Britain, vol. i (1939), p. 19.
2
Ash ton, The Eighteenth Century, p. 40.
arable lands and fields cultivated on the open-field system
(together with their associated commons) and the Acts con-
cerned merely with the enclosure of common pasture and waste.
The former permitted (though did not ensure) the introduction
of the new techniques of large-scale farming, mechanization,
stockbreeding, land drainage and scientific experiment. The
latter often did no more than extend the margin of cultivation
to lands which had been worthless when the price of corn was
low. 'Before 1760 the number of Acts dealing more specifically
with the open-field system (i.e. Acts dealing primarily with
arable fields and meadows) did not exceed 130. Between 1760
and 1815 the number rose to upwards of 1800." Certainly by
the end of the eighteenth century English agricultural experts
were convinced that the only way of expanding the output of
the cultivated area, so as to keep pace with the increasing
demands that were being made on it, was to break up the
open-field farms and to put the commons to profitable com-
mercial use. So in 1801 the procedure for statutory enclosure was
streamlined by the first General Enclosure Act, which simplified
the parliamentary machinery for enclosure of commons and
thus reduced its expense. The result was a burst of expenditure
relating to small acreages which had previously not been worth
enclosing.
It is impossible to say exactly how far the enclosure of the open
field contributed to the revolution in agricultural techniques.
'It is significant', writes Ashton, 'that nearly all the improve-
ments in agricultural technique of which there is a record were
made on lands already enclosed or in process of enclosure.'2
There is no doubt that enclosure extended the area of productive
land in England, though not all of this extension lasted into the
agricultural depression that followed Waterloo. When the
pressure for food was at its height, particularly in the famine
periods of the Napoleonic Wars, there was a tendency to put
wastes and commons under the plough, and marginal lands that
would never support corn at its normal peacetime price were
sown to wheat. It has been estimated that between 1727 and
1760 when corn prices were generally low, less than 75,000 acres
of common pasture and waste were enclosed by Parliamentary
Acts; between 1761 and 1792 the acreage was not far short of
half a million—about 478,000; over the period of the French
1
Lord Ernie, English Farming Past and Present, p. 163.
2
Ashton, The Eighteenth Century, p. 34.
and Napoleonic Wars it rose to over a million; and in the period
1816-45 it fell again to under 200,000 acres.1 This substantial
contribution to the nation's land resources was an important
part of the explanation for its ability to feed a rapidly growing
population (even if at deteriorating standards of diet) and
expanding centres of industry, and to weather an unusual
proportion of deficient harvests and a major war. It must not
be forgotten, however, that the new agricultural techniques, by
producing high yields from the light sandy soils which had
formerly been relatively unproductive, turned once-marginal
lands into valuable wheat growing areas. They were worth a
great deal more, in money terms, to the innovating farmer than
to the peasant who had grazed his skinny stock on them.
It used to be said that the enclosures created a reservoir of
cheap labour without which the industrial revolution would
have been impossible. It was said that they depressed and drove
out the yeomen, pauperized the cottagers and depopulated the
villages. Attempts to test these hypotheses against the records
available for specific regions and communities in the peak
periods of parliamentary enclosure (that is, in the second half
of the eighteenth and early nineteenth centuries) have thrown
considerable doubt on them, however.
The evidence on population, for example, indicates that the
inhabitants of the rural areas grew almost as fast in numbers
as those of the industrial centres. The fencing, hedging and
ditching operations required by enclosure of the common fields
required more rather than less labour. There may have been
cases when the land was converted from subsistence crops to
permanent pasture, and hence used less labour, but as popul-
ation grew and the price of corn soared this was less likely to
be the case. The sowing of commons and waste to arable crops
also called for more rather than less labour. So too did the
new agricultural techniques which enclosure permitted—the
elimination of the fallow, growing of root crops and artificial
grasses, and the establishment of large herds of dairy cattle and
pedigree stock. Whereas non-parliamentary enclosure must
have led to absorption and consolidation of large holdings,
regional research for periods after 1780 suggests that enclosure
by Acts of Parliament produced an increase in all grades of
1
G. Slater, The English Peasantry and the Enclosure of the Common Fields (1907),
p. 267.
1
occupying owners. Under the Enclosure Acts many common-
right cottagers received compensation for their rights which
permitted them for the first time to buy small plots of land.
While the artificially inflated wartime prices prevailed they
could make a reasonable living out of these marginal plots.
In effect, enclosure, stimulated by rising corn prices, tended
to operate in the interests of all who could establish or buy a
claim to land and made many smallholdings profitable. The
radical thinning-out of the small owner-occupiers came after
Waterloo when prices plunged and poor-rates soared, and only
the large landowners could hope to survive. While there was
undoubtedly a long-term trend towards an increase in the size
of holdings which was rightly associated with enclosures it was
not a direct result of the revolutionary period of the enclosures
in the late eighteenth and early nineteenth centuries. Moreover,
it must be remembered that England is still a country of
medium-sized and small farms and that the numbers engaged
in agriculture went on expanding throughout the period of the
enclosures. It was not until after the middle of the nineteenth
century that the numbers began to show an absolute decline.
In sum, it is important not to exaggerate the impact of the burst
of parliamentary enclosures which coincided with the early
stages of the industrial revolution in England.
3. CHANGES IN ENTREPRENEURIAL ATTITUDES
More important, perhaps, either than the new techniques
introduced in the second half of the eighteenth century or the
changes in the size and organization of farms which occurred
during the peak periods of parliamentary enclosure, were the
associated changes in the attitudes of farmers to their agricul-
tural activities. In this, causes and effects were inextricably
entangled. Growth of population, urbanization and industrial
expansion, proceeding over long periods of time, gradually
widened the market for agricultural produce and created a
climate favourable to innovation and to consolidation of
holdings. The response of the agricultural industry to this steady
enlargement of opportunity removed some of the barriers to
further growth of population, of cities and of industry: and these
in their turn created new opportunities for agriculture. The
1
J. D. Chambers, 'Enclosure and the Small Landowner', Economic History Review,
vol. x, p. 123.
crucial factor in this process of development and change,
however, was the human factor. It was because the decision-
takers in the agricultural industry were willing to revise their
methods of cultivation and organization on a sufficient scale
that they transformed the industry.
It is worth bearing in mind, when considering the relationship
of the agrarian revolution to the process of industrialization in
England, that both were part and parcel of the larger process
of economic transformation that we are accustomed to call the
Industrial Revolution. Essentially the changes that were taking
place in the agricultural industry were of the same kind as those
that were taking place in manufacturing and commerce. They
included three significant features: (i) a widening of economic
horizons in both space and time, so that agriculturalists generally
became more concerned with producing for a national or
international market than for home or regional consumption,
and some of them began to embark on schemes of land drainage
or livestock breeding which would yield their full return not
at the next harvest season but at some much more distant date;
(2) an increase in economic specialization reflected in the
appearance of the professional farmer or the landless labourer
in place of the self-subsistent peasant working for wages only in
harvest and planting seasons; and (3) the application of
scientific knowledge and experimental methods to activities
which had formerly been rigidly regulated by tradition, com-
munal practice and rule of thumb.
Developments of this kind are of the essence of an industrial
revolution in the broad sense of the term. In agriculture they
took place slowly, though cumulatively. None of them were
sudden in their incidence, nor was their impact attributable to
a specific narrow space of time. All of them, however, were
stimulated, to an extent which is difficult either to measure or
to overstress, by the high price of corn which distinguished the
second half of the eighteenth century and reached its climax in
the French Wars which ended with Waterloo.
The new attitude to agriculture which eventually permeated
all classes of the community began to be conspicuous in the
upper ranges of the social scale. 'George III rejoiced in the title
of "Farmer George", considered himself more indebted to
Arthur Young than to any man in his dominions, carried the
last volume of the Annals [of Agriculture] with him in his
travelling carriage, kept his model farm at Windsor, formed his

flock of merino sheep and experimented in stock breeding.' 1
The aristocracy, the clergy, even the politician-landowners and
industrialist landowners like John Wilkinson were passionately
concerned with the craze for agricultural improvement. Tech-
nological progress in agriculture was something which concer-
ned them all and in which the eighteenth century was evidently
fruitful. A host of farming societies and associations were set up
for the exchange of knowledge and ideas. The Board of
Agriculture was created in 1793 to spread the new gospel. A
growing number of land stewards on large estates actively
propagated improved farming methods in their advice to
tenants and some progressive landlords pushed their tenants
along the path of innovation by writing into their leases and
farm agreements the duty of taking the steward's advice.2
Change may have been less deliberately sought after by the
smallholders, the tenant farmers and the villagers, but it was
none the less apparent by the second half of the eighteenth
century, though it took until the middle of the nineteenth
century to become general. Gradually, however, as enclosure
transformed the institutional framework, the new entrepre-
neurial attitudes seeped through to the smallest agricultural
producer. Regional researches reveal the extent of the trans-
formation in one area after another. Dr Hoskins, studying the
process of rural change in the Midlands, has described the
revolutionary effects produced by enclosure in the Midlands.
' The self-supporting peasant was transformed into a spender of
money... Peasant thrift was replaced by commercial thrift.
Every hour of work now had a money value: unemployment
became a disaster for there was no piece of land the wage-earner
could turn to.' 3 Dr Thirsk's studies of Lincolnshire are equally
revealing in their description of change. In the fen villages, for
example, the children and grandchildren of those who had
specialized in rearing geese and catching fish and wild fowl got
their living in the new agriculture as ploughmen and labourers
on rich cornland. Throughout the Lincolnshire villages
1
Lord Ernie, British Farming, Past and Present, p. 207.
2
G. E. Mingay, 'The Eighteenth-Century Land Steward' in E.J.Jones and G. E.
Mingay (eds.), Land, Labour and Population in the Industrial Revolution (1967).
3
W. G. Hoskins, The Midland Peasant (1957), p . 269.
there is no doubt that enclosure and the improvements which it made

possible, raised ambitions in the ordinary farmer for the first time, and
that the fresh opportunities suddenly opened up brought into action
stores of human energy never previously tapped. The psychological
effect of change doubled and trebled the force of the original stimulus,
with the result that people were willing to go beyond the economic
limit in spending money and effort on their farms.1
In sum, then, what can we say that the agricultural revolution
contributed to the process of industrialization in England?
What part did agriculture play in the first industrial revolution?
By definition, of course, the role which agriculture plays in a
pre-industrial economy must be important. A general rise in
agricultural incomes represents a rise in incomes for the majority
of the population; technological change in agriculture affects
the majority of producers; a fall in agricultural prices tends to
lower the cost of raw materials for the sectors outside agriculture
and of foodstuffs for wage-earners generally.
It is reasonable to suppose, therefore, that the run of good
harvests which characterized the period from about 1715 to the
1750's reduced the costs of British industry (most of which
depended on agricultural raw materials) and increased the
surplus incomes which the rural and urban poor could spare
from their subsistence needs to spend on manufactured goods.
The gin age was one manifestation of this process. The steady
development of the textile industries was another and healthier
reflection. Thus the beginnings of the expansion of British
population and industry which can be traced back to the 1740's
may have been significantly conditioned, possible even set off
by the agricultural prelude. Although landowners and large-
scale farmers found that good harvests depressed their incomes
in the early eighteenth century, cottagers and agricultural
labourers (and these were of course the majority) certainly
benefited, as did the consumers and the producers in industries
outside agriculture.
In the second half of the eighteenth century the interaction
between industry and agriculture took a different form. The
rising price of corn, stimulated by urbanization and industrial
growth, encouraged extension of the cultivated acreage, cost-
reducing improvements in techniques, and professionalization
1
J. Thirsk, English Peasant Farming (1957), p. 296.
of farming at all levels. Higher incomes for landowners and
tenants provided both incentive and finance for agricultural
progress. If the agricultural industry did not actually supply the
labour which the labour-intensive techniques of the new
industry demanded, it fed the increasing population from which
the industrial labour force was drawn. Between 1751 and 1821
the population of England and Wales more than doubled, and
still the import of corn was insignificant except in years of
agricultural disaster. Had the agricultural industry not risen to
the challenge, it is difficult to see how the first industrial
revolution could have taken shape, as it did, in a small country
with a very narrow basis of natural resources; for the foreign
exchange which could be used to import raw cotton and iron
and wool would have been required to buy food imports. As it
was, the English industrial revolution was able to develop
irreversible momentum with the aid of a leading industry—
cotton—whose basic raw material had to be entirely imported
from non-temperate latitudes. For many of today's under-
developed countries it is precisely their inability to expand the
domestic output of agricultural products at a pace sufficient to
feed the rising population that constitutes the biggest obstacle
to sustained industrialization.
In meeting the challenge British agriculture kept within the
domestic economy purchasing power that would otherwise have
leaked into foreign markets. Increased incomes in agriculture
meant increased purchasing power for the products of British
industry and created the solid home-market which justified
large-scale production and made factories profitable. It is
always difficult and risky to build up an industry on the strength
of foreign demand. It was particularly difficult in the unsettled
international conditions of a half-century which included the
Seven Years War, the War of American Independence, the
French Revolution, and the European conflagration which
ended with Waterloo. Yet this was the period in which the
process of British industrialization gathered unprecedented
momentum. Had it been mainly dependent on foreign markets
for its basic demand it is hardly likely that British industrialists,
and their backers in commerce and finance, would have
ventured their capital with such sturdy confidence. The exist-
ence of an expanding home-market reduced the element of
uncertainty to calculable proportions and provided the strongest

incentive to innovation.
Finally the agricultural industry provided a substantial part
of the capital required for successful industrialization. It is not
possible to analyse precisely the sources of the funds which
financed the first industrial revolution, but it is clear that the
premier British industry—agriculture—made an important
contribution. Most of the early iron-works, for example, were
built originally by landowners. Farmers were prominent sup-
porters of schemes to improve local communications by road,
river or canal. Many of the new breed of industrialists came from
a rural background, and found their capital by borrowing either
on the strength of their own lands or from their farming friends
and neighbours. It was a two-way flow, of course, because the
revolution in industry and the revolution in agriculture were
part of the same process. It was natural enough for successful
industrialists to build up the social prestige and creditworthiness,
which they needed to help them finance their industrial ventures,
by putting some of their profits into landed property. It was
natural too for the more enterprising of them to operate their
landed estates in the same progessive innovating spirit in
which they ran their factories. John Wilkinson the famous
iron-master, for example, used some of his industrial and mining
profits to finance agricultural improvement. He undertook
large-scale land reclamation and afforestation schemes, and was
a pioneer in the use of agricultural machinery: in 1798 he
installed a threshing machine driven by steam-power.1
Moreover the agricultural industry carried much of the
burden of the State. The land-tax was the traditional stand-by
of government revenue throughout the eighteenth century.
Even when the strains of total war forced Pitt to impose an
income-tax, it was still the agricultural sector which footed most
of the bill, partly because of its size and partly because it was
easier to assess and to collect tax for a stable agricultural
community than for an urban group. Between 1803/4 and
1814/15 gross incomes assessed for tax under schedule D (the
trade and industry sector) rose by under 10 per cent despite a
galloping inflation, whereas the increase for schedules A and B
1
W. G. Chaloner, 'The Agricultural Activities of John Wilkinson, Ironmaster',
Agricultural History Review, vol. v (1957).
(agricultural and land incomes) was nearly 60 per cent. Had
the commerce and industry sectors paid their 'fair share' of the
mounting cost of the French wars it is likely that the industrial
revolution, then in its early stages, would have suffered a severe
setback.
Briefly then, the agricultural revolution in England can be
said to have contributed to the effectiveness of the first industrial
revolution in three main ways: (1) by feeding the growing
population and particularly the populations of the industrial
centres, (2) by inflating purchasing power for the products of
British industry, and (3) by providing a substantial part of the
capital required to finance industrialization and to keep it going
even through a period of major war, and (4) by releasing its
surplus labour for employment in industry. However, the
changes in technology, agrarian organization and entreprene-
urial attitudes which constituted the agricultural revolution
developed over a period roughly twice as long as the century
1750-1850 to which the industrial revolution is generally
attributed. It is now evident that substantial improvements in
farming practice were widely diffused in the period 1650-1750;
and that the modernization of agriculture, through mechanical
techniques, artificial fertilizers and capital-intensive drainage or
irrigation projects, did not gather appreciable momentum until
after 1850. Developments in agriculture were no doubt impor-
tant among the environmental conditions which stimulated the
initial upsurge of population and industrial output in the 1740's,
and which facilitated the acceleration of British economic
growth in the later eighteenth and early nineteenth centuries;
and the agricultural surplus—whether of labour or investible
funds—helped to power the industrialization process through
the eighteenth and nineteenth centuries. It was not until the
second half of the nineteenth century that the numbers employed
in agriculture began to contract and that the contribution of
agriculture to British economic growth began to assume
diminishing importance.
CHAPTER 4
THE COMMERCIAL REVOLUTION
One of the ways—the commonest way perhaps—by which an

economy can develop from a pre-industrial to an industrial state
is to exploit the opportunities open to it from international
trade. By selling abroad goods which are in surplus at home in
return for goods which are scarce at home, it is possible both
to widen the range of goods and services coming on to the
home-market and to increase the value of domestic output, and
so to improve the national standard of living both qualitatively
and quantitatively. In widening the potential market for
domestic producers, foreign trade encourages them to specialize,
to develop special skills and techniques of economic organiza-
tion, and to reap the economies of large-scale production. This
broadening of their economic horizons constitutes an incentive
to greater productive activity and helps to break up the
economic inertia which so often inhibits material progress.
For any country the limits to economic growth based on
international trade are set by the range of goods which it can
persuade its trading partners to buy and by the intensity with
which its people desire the goods that foreigners have to sell.
In the eighteenth-century world of pre-industrial economies,
where each country—each region in some cases—produced
most if not all of its own basic needs, international trade was
largely limited to luxuries and to goods which were localized
in their geographical incidence—wines, tobacco, sugar and
high-quality textiles, for example, or fruit, fish and minerals. For
countries situated in the same geographical latitudes, the
opportunities for trade are further limited by the basic similar-
ities of the patterns of production in the trading partners, as
well as by the fact, of universal significance, that the demand
for any one commodity (especially a luxury) rapidly approaches
saturation point in any one market. Since many pre-industrial
countries depend heavily on a particular export commodity
53
—the crop or the skill that they happen to have in unusual

abundance—the foreign demand for this commodity is not
easily expanded unless new trading partners can be found and
new markets can be opened up. For pre-industrial Europe the
obvious way to achieve economic growth was to extend the
range of its trading relationships and to open up markets in
other continents, and in consequence the economic history of
the fifteenth, sixteenth and seventeenth centuries is filled with
attempts to expand the European trading horizon. But this was
a difficult business. The underdeveloped world then, as now,
was poor in purchasing power. It was often indifferent—more
so than today's Third World—to the goods that Europe had to
sell, especially at the high prices imposed by long and dangerous
journeys over difficult seas and terrain.
In this bid to expand the economic horizon of the most
rapidly developing region of the world, Western Europe,
Britain was in a strategically favourable position. Britain also
had a peculiarly strong incentive to succeed, for its own
endowment of natural resources was comparatively narrow
and in no sense unique. It was not more fertile than the rest of
Western Europe: its timber and mineral resources were limited
and exhaustible: its access to the northern fisheries was no easier
than that of the Dutch or the French. It was thus highly
sensitive, then as now, to foreign competition. It had succeeded
in building up a flourishing manufacturing export by processing
the wool which it had in relatively abundant supply and in good
quality, and by developing the technical skills and commercial
techniques which permitted it to sell quality woollens more
cheaply than most of its neighbours. For most of its pre-industrial
trading history England came close to being a single export
economy: ' from the days of the Angevin kings to the time of
the Cromwellian Protectorate, wool or woollen cloth constituted
almost the whole of English exports'. 1 At the middle of the
eighteenth century woollen textiles still accounted for well over
half the value of English domestic exports.
But by this time the Atlantic trade had been opened and
English plantations in the West Indies had greatly extended the
range of commodities which English merchants could sell in
Europe. Like the spices and tea of the Far East, the West Indian
1
Ralph Davis,' English Foreign Trade 1660-1700', Economic History Review (December
1954), P- I5O-
THE COMMERCIAL REVOLUTION 55
products—sugar, tobacco, cotton, indigo and dyewoods—were
valuable commodities unobtainable in Europe and were rapidly
becoming necessities of life there. In the half-century ending in
the early 1750's the volume of English re-exports had increased
by 90 per cent: in the next half-century the re-export trade
expanded more than twice as fast.
The immense importance of the tropical commodities lay in
the fact that they increased British purchasing power on the
continent of Europe. Britain needed her European imports for
vital productive purposes and not merely to meet the upper-class
demand for wine and brandy. She needed foreign timber, pitch
and hemp for her ships and buildings, high-grade bar iron for
her metal trade, raw and thrown silk for her textile trades. Her
industrial expansion along traditional lines was severely
restricted by the fact that the demand for woollen products was
inelastic and already near saturation point in traditional
markets. Had it not been for the tropical products with their
income-elastic demand and growing markets in temperate
regions it would have been difficult to expand British trade with
Europe.
The tropical products also had to be paid for, of course, and
it was not easy to buy them with woollen manufactures. The
tropical demand for woollen goods was naturally limited by
climatic considerations, and there were no other British goods
with a special advantage in most markets. In Africa, for
example, the demand for British manufactures was further
restricted by low incomes, in China by the fact that local
manufactures were often at least as good and always a great deal
cheaper. In the end the solution to the numerous problems of
matching demand and supply in the international market was
found by developing a complex world-wide network of trading
transactions centred on London. In this network the West
Indian islands, administered by a British plantation elite on the
basis of a slave society, constituted the most valuable and
intimate link. Weapons, hardware, spirits from Britain and
calicoes from India were shipped to west Africa and exchanged
for slaves, ivory and gold. The slaves were sold in the West
Indies for sugar, dyestuffs, mahogany, logwood, tobacco and
raw cotton. The gold and ivory was shipped to the East and
Near East for teas, silks, calicoes, coffee and spices. The tropical
goods were sold in Europe for Baltic timber, hemp, pitch and
tar (all essential naval stores), Swedish and Russian iron; and,
in the fourth quarter of the century, they paid for the foreign
grain which was vital when the harvest failed and which was
regularly required in most years even when the harvest did not
fail.
On all these transactions British merchants and shippers got
their profits, generally computed by customs officials as about
15 per cent of the value of the goods imported for re-export;
and as a net result British producers and consumers got vital
raw materials and desirable luxuries from the ends of the earth.
The domestic resources which permitted the British to expand
their overseas trade in this way were fourfold: their basic human
capital in seamen and navigators, their commercial advantage
in the form of a merchant class with the funds and the flair for
risk-taking, their organizational background in the form of a
credit centre with immense financial skill and experience, and
their constitutional heritage in the shape of a government which
was in complete sympathy with the acquisitive aims of the
mercantile classes. These advantages gave them freedom to
experiment and to follow up the most promising lines of trade
wherever they led. It was here in the commercial sphere that
the major innovations were taking place in the early eighteenth
century.
By the middle of the eighteenth century the commercial
monopolies which had made it possible in the seventeenth
century to support the difficult and dangerous business of
overseas trade at a distance were giving way to the individual
merchant, the incipient free-trader. The years about the mid-
century saw a considerable relaxation in the company system
by which English foreign trade had normally been conducted.
The success of the system made its dissolution inevitable.
There were more capitalists wealthy enough to finance voyages
individually than there had been a century earlier. The risks
of foreign trade, though still considerable, had been diminished
by the extension of diplomatic offices, by the efficiency and
strength of the Royal Navy and by the development of marine
insurance. These developments reduced the need for the Char-
tered Company in a steadily widening area of trade. Of the great
joint-stock companies, the East India and the Hudson's Bay
Company survived because it seemed that the trades they served
still needed the protection which only a company with
permanent and collective financial resources could provide. The
third, the African Company, was wound up, and in 1750 its
exclusive monopoly was broken when it was formally recon-
stituted as a regulated company comprising all the merchants
trading to Africa. In 1753 a bill was passed which threw open
the Levant Company in the same way and 'brought it into line
with the new fashion'.1
At the middle of the eighteenth century then, the bulk of
British trade was with Europe, which took three-quarters of all
exports from English ports. This was a natural development.
Europe was relatively accessible to British traders. Its inhabi
tants had the same sort of tastes as the home-market and they
earned incomes which, though they may have been lower on
an average than British incomes, were distinctly higher than
those of most non-European countries. The cities of Europe
were among the richest markets in the world. But in 1772/3
Europe took only half of British domestic exports (that is, the
goods produced within the British Isles) and this share was
falling. By the end of the century it took about a third. In order
to expand the markets for British domestic exports it became
more and more necessary in the second half of the eighteenth
century to look for markets outside Europe. On the other hand,
European demand for the commodities which could not be
produced in temperate climates was expanding rapidly. Britain's
naval supremacy, which became virtually complete when the
French were pinned down by their revolutionary wars in the
last decade of the century, enabled her to meet this expanding
demand from her plantations in the West Indies and her trading
outposts in India and beyond. By the 1790's Europe was
absorbing between 80 and 90 per cent of Britain's re-exports,
and the West Indies and the Far East were supplying about half
of Britain's imports. These changes in the geographical pattern
of trade are illustrated in Table 2.
One of the most interesting and significant features of the
change in the British trading network in the second half of the
eighteenth century, however, was the growth in the importance
of a new market in temperate latitudes—North America. The
North American colonies were not very populous in the first half
of the century. As late as 1750 there were less than a million
1
Charles Wilson in The New Cambridge Modern History, vol. v n (1957), p. 48.
T A B L E 2. The geographical distribution of English trade in the

eighteenth century
As per-
Percentages of totals for centages of
England and Wales total for
i700/1 1750/1 1772/3 1797/8
Total imports from:

Europe 66 55 45 43
North America 6 11 12 7
West Indies 14 19 25 25
East Indies and Africa '5 18 25
Re-exports to:
Europe 85 79 82 88
West Indies 6 4 3 4
East Indies and Africa 4 5 6 4
Domestic exports to:
Europe 85 77 49 30
West Indies 5 5 12 25
East Indies and Africa 4 7 14
SOURCE: Compiled from the custom-house ledgers; P.R.O. Customs 3 and 17. For
a more detailed analysis see Deane and Cole, British Economic Growth, Table 22.
white residents. But by the time the American War of Inde-

pendence had ended with the establishment of the United States
of America, there were nearly 3 million inhabitants in the new
country of whom more than 2*- million were white and relatively
prosperous. 'The wages of labour', observed Adam Smith in his
Wealth of Nations, first published in 1776, 'are much higher in
North America than in any part of England. ?1 He had no doubt
that it was a growing and developing economy, for he went on
to say: ' Though North America is not yet so rich as England
it is much more thriving, and advancing with much greater
rapidity to the further acquisition of riches.' The trade figures
were to bear out fully Adam Smith's interpretation. In 1750/1
North America took 11 per cent of British domestic exports
compared with a European share of 77 per cent: by 1797/8 its
share had risen to 32 per cent of a trade which had swelled to
twice the 1750 volume, and the European share had fallen to
30 per cent.
1
Adam Smith, Wealth of Nations, Cannan ed., p. 71.
The fact is that the North Americans preferred British
manufactures, largely no doubt because they were predomin-
antly British emigrants themselves. Even when the colonists won
their independence and were freed from the compulsion of the
Navigation Laws they still bought British from choice. In
1787-90, for example, they were taking 87 per cent of their
imports of manufactures from Britain.1 Again the trade was
balanced multilaterally rather than bilaterally. About a third
of the exports of the United States went to Britain and were paid
for largely by giving British merchants access to the credits that
the United States had built up with their exports to Ireland and
continental Europe.
The centre of the wide, intricate, multilateral network of
world trade that grew up during the eighteenth century was
London. London with its wide sheltered anchorages, its vast
wharves and warehouses, its rich city banks, its specialists in
marine insurance and its world-wide mercantile contacts, was
uniquely qualified for this role. It drew to itself a cosmopolitan
concentration of wealth and commercial expertise. According
to Professor Ash ton, 'Of the 810 merchants who kissed the hand
of George III at least 250 must have been of alien origin. It was
one of the merits of the English at this time that they opened
their doors to capital and enterprise from all quarters.' 2 The
London money market was the centre of the national credit
system for the richest country in the world, and, largely by
virtue of its immense entrepot trade, it became a centre of credit
for the whole world, finally displacing Amsterdam and Paris
when these were submerged by the French wars. In the second
half of the eighteenth century it was the best place in the world
to find credit on reasonable terms or to invest one's capital at
a lucrative return. It was this unique combination of circum-
stances that was to turn it into the world's financial centre for
more than a century.
These developments were of importance internationally as
well as nationally. Not only did they facilitate the British
industrial revolution, but they helped to extend its impact to
a wide range of underdeveloped areas within and beyond
Europe. It was essential to national economic progress that there
should have been some means of channelling the funds which
1 2
Ashton, The Eighteenth Century, p. 159. Ibid. p. 140.
became available in the saving regions of the country into the
institutions which could meet the needs of the investing regions.
It was also essential that the underdeveloped areas of the new
world should be given access to capital stored up in the old world
if they were to become effective partners in an international
trading relationship and to exploit their accessible resources in
land and labour. It has been said, for example, that 'only the
merchants of Great Britain with the resources being mobilized
especially in 18th century London could have financed the
rapid expansion of the English speaking colonies in the New
world'. 1 And there is no doubt that the British colonial empire
was an important means of rapidly spreading the benefits of
technical progress far beyond the confines of Europe.
The expansion of the entrepot trade, the lucrative business
of collecting foreign goods and redistributing them to foreign
customers, helped to turn London into the financial centre of
the world, made a considerable direct addition to the incomes
of British merchants, shippers and seamen, and gave merchants
access to a vast network of markets in which to buy raw
materials for British industry or to sell the output of British
industry. Between the 1750's and the 1790's the value of English
re-exports, measured at official (constant) values, expanded
from about £<$^ millions to about £gj millions.2 By 1800, as
British merchants seized the opportunities created by the
French wars (which crippled Britain's two chief commercial
rivals, Holland and France), the value of re-exports at official
values had risen to over £183- millions.
The significance of the re-export trade in contributing to
British economic growth and industrialization lay predomin-
antly in its indirect effects on economic organization and
opportunity. It was a direct source of incomes only to a limited
group of merchants and seamen. Obviously the direct impact of
international trade on British incomes and industry was more
effective when exercised through the trade in domestic exports
and retained imports; that is, through the goods and services
which were the product of British industry or were wholly paid
for out of British incomes. A substantial part of the final value
of re-exports, probably between half and three-quarters,
accrued to the original producers in their countries of origin.
British residents benefited directly only to the extent of the value
1
G. D. Ramsay, English Overseas Trade During the Centuries of Emergence (1957), p. 237.
2
See below, p. 62, for the definition of'official' values.
THE COMMERCIAL REVOLUTION 6l
of the distribution and processing services rendered by the
commercial sector. On the other hand, the export of, say, a
yard of English broadcloth generated income for the farmer
producing the wool, the industrial capitalist and the carrier who
collected and distributed the raw material, the spinner and the
weaver who worked it up, and the merchant, insurance broker,
shipper and seamen who put it on the foreign market. Or to put
it another way, in determining the contribution to the national
income of a £ ' s worth of domestic exports we take the whole
of its value into consideration: in doing the same for a £'s worth
of re-exports we must first subtract the basic value of the
commodity in its country of origin, for this made incomes for
foreign producers.
In effect, expansion of the exports of woollen manufactures
in the late eighteenth century meant a better market for wool,
more regular employment for spinners and weavers and a
higher return on capital invested in the home-country. Similarly
increasing exports of other British manufactures encouraged
new industrial investment and innovation and generated in-
creased domestic purchasing power. Under the circumstances
the statistics of domestic exports are particularly significant in
any attempt to assess the rate of national economic growth.
They are all the more important for eighteenth-century Britain
because the overseas trade statistics are the only reliable annual
records of an overall kind. We have no annual statistics of
national income for this period and no other way of assessing
the progress of the economy as a whole. To a considerable
extent, therefore, the trade statistics have provided most of the
justification for general theories of English economic growth
—for example, for Professor Rostow's thesis that it was during
the period 1783-1802 that the British economy experienced its
' take-off' into self-sustained growth.1 Before going on to discuss
these implications, however, let me say something about the
statistics themselves, about their basic reliability and meaning.
Regular, centrally compiled, records of English overseas
trade date from 1696. For Scotland (and hence for Great Britain
as a whole) they date from 1755. The basic source of these data
are the Inspector-General's manuscript Ledgers of Imports and
Exports for the period 1697-1780 and the printed Reports on the
State of the Navigation Commerce and Revenues of Great Britain for
1
As also for his later gloss on this thesis, to the effect that there was a phase of
deceleration from 1802 to 1815. See W. W. Rostow, The World Economy (1978), p. 383.
1772 onwards. Until quite recently students who wanted to use

these figures have either had to go back to the manuscript
sources or parliamentary reports, or to rely on one of the many
transcriptions from these sources, made by contemporaries,
which were full of copying errors and unexplained discrepancies.
Now, however, the trade figures have been made a great deal
more accessible. At present the best detailed source of eighteenth-
century foreign-trade statistics is contained in a compilation by
Mrs Schumpeter, which was posthumously edited by Professor
T. S. Ashton.1 This source has the additional advantage of
being prefaced by Professor Ashton's introductory essay on the
trade statistics. There are some odd omissions from the volume
—it lacks the series for exports of grain or for imports of raw
cotton—but all the other important overseas trade figures are
there for the eighteenth century.
It is important to remember, however, that they do not
appear in precisely the same form as modern trade statistics. In
particular, the value figures do not reflect the amounts actually
paid for imports or the amounts actually received for exports.
Eighteenth-century clerks transcribed the actual quantity of the
commodities as reported to them by importers and exporters
and valued them in terms of an officially prescribed set of
constant prices, most of which were laid down at the end of the
seventeenth century. These were the famous 'official values',
which were the only values applied to export statistics until the
late eighteenth century and to imports until the mid nineteenth
century. Actually the prices used by the Inspector-General's
clerks were not completely fixed throughout the period of the
official valuation of English foreign trade, though the vast
majority of them were standardized by the second half of the
eighteenth century; and of course new commodities had to be
introduced at the prices prevailing when they were introduced.
Mrs Schumpeter, however, has removed one source of
confusion—changes in the official valuations—by deliberately
revaluing the quantities of imports and exports at a standard
set of official values throughout the century. As a result her
aggregates differ somewhat from the Inspector-General's aggre-
gates but they do constitute a genuine constant price series.
In principle, of course, there are advantages for some purposes
1
English Overseas Trade Statistics i6g?-i8o8, by E. B. Schumpeter. Edited with an
introduction by T. S. Ashton (i960).
in valuing imports and exports at constant rather than at
current prices. Such series do not permit an assessment of the
true balance of international payments because they do not show
what residents are actually getting from or paying out to
foreigners. For most of the eighteenth century we have no means
of judging when the balance of payments was 'favourable' or
'unfavourable'. But what a constant price series does do is to
take out the effects of changes in the value of money and so give
a closer approximation to what we might call the ' real' changes
in the amount of trade. Nowadays when trade is originally
recorded at current values, one of the first tasks of the analyst
concerned with productivity or growth problems is often to
remove the 'veil of money' from the statistics by constructing
a volume index. This in essence is simply a matter of valuing
all quantities at the constant prices of some particular year. It
permits an assessment of the change in the amount of trade as
if there had been no change in relative prices or the value of
money over the period under consideration. Hence, in so far as
we are interested in the quantity of goods entering into
international trade rather than in their current values in the
eyes of contemporaries, we should be grateful to the eighteenth-
century clerks for giving us a rough volume-index of English
overseas trade and to Mrs Schumpeter for making sure that the
measure is really a standard measure by using constant prices.
If the prices are not standardized the attempt to use the series
as a measure of the change in the volume of trade is as
unsatisfactory as the attempt to measure length with a ruler
whose length and gradations are changing in the process.1
The fact is, however, that even Mrs Schumpeter's calculations
do not provide an entirely satisfactory measure of the change
in the volume of trade in the eighteenth century. When one tries
to eliminate the effects of changes in the value of money over
a period of time by valuing quantities at constant prices, one
does so on the assumption that changes in the price level have
been more important than changes in price relatives and that the
structure of prices was much the same at the end of the period
as it was at the beginning. Otherwise indeed it would be difficult
to decide which set of prices to use. In effect, if there is a
considerable variation in the relative values of the different
1
commodities over the period considered, one would get an

appreciably different measure of the increase in the volume of
trade by accepting end-year prices as the constants than one
would by accepting first-year or mid-year prices. In other words
the measure is indeterminate. Our ruler gives a different answer
if we start measuring from right to left than it would if we started
measuring from left to right. If the period is fairly short the
effects of changes in tastes or techniques will be limited and
confined to a minority of goods. In that case the structure of
prices will have altered too little to affect the answer much. For
the price structure reflects a whole host of circumstances which
are fairly slow to change in the aggregate—costs of production
and community standards of value or taste, for example—
whereas the price level fluctuates with the amount of money
in circulation or the velocity with which it circulates and is thus
much more variable. But if the period covered is long enough
to permit important shifts in conditions of production, and
consumers' tastes, then the structure of prices can reasonably
be expected to have changed significantly and different basing-
points will suggest significantly different amounts of trade for a
particular year.
With these problems in mind, economic historians have
tended to use the eighteenth-century trade statistics cautiously,
for in a whole century a great deal can happen to costs and tastes
and methods of economic organization. Recent research,
however, has thrown some more definite light on the margins
of error involved and they do not seem to be as large as has
sometimes been supposed. An attempt has been made to check
the efficiency of the official value statistics as a measure of the
growth in the volume of trade by doing the calculation in the
reverse direction, that is, by applying the prices of the period
1796/8 to the quantity data and comparing the rates of change
suggested by these results with the rates of change that emerge
from the official value aggregates, based as these are mainly on
late-seventeenth-century prices. Surprisingly enough, the dif-
ference between the two measures is not wide except in the case
of re-exports, where there seems to have been a considerable
distortion due to the sharp fall in prices and sharp rise in
consumption of certain tropical goods. Coffee and tea were the
major examples, though these were not the only ones concerned.
To specify: for domestic exports the official values suggest an
increase in volume of 398 per cent between 1702/3 and 1797/8,
whereas the 1796/8 valuations give an increase of 421 per cent.
For imports (including imports destined for re-export) the
official values suggest an increase of about 423 per cent and the
1796/8 values imply 328 per cent.1
The conclusions we can draw from this comparison are that
the official values give a muted indication of the growth in the
value of domestic exports and an exaggerated indication of the
growth of imports, particularly certain tropical imports.
Nevertheless it can confidently be presumed that the volume of
domestic exports multiplied by between 2 and 2j times in the
second half of the eighteenth century, that retained imports
probably expanded to roughly the same extent and that
re-exports, which quadrupled at the official values, probably
trebled when measured at 1796/8 prices. Undoubtedly domestic
exports grew faster than population in the second half of the
eighteenth century. Measured at 1796/8 prices the value of
English domestic exports rose from barely £2 per head in
1752/3 to about £2. 15J. per head of the population in 1797/8.
This must have represented a substantial addition to average
incomes, more especially for the sectors which were producing
for the export trade.
More significant indeed than the change in the volume of
domestic exports was the change in its composition—the shift
from primary products to manufactured goods and from the
products of the old domestic type of industry to the products
of the new capitalistic factory industry. In 1750 grain accounted
for a fifth of English exports: by 1800 England had become on
balance a grain-importing country. In 1750 refined sugar made
up less than 1 per cent of English exports: by 1800 it was 4^- per
cent. In 1750 woollens accounted for 46 per cent of exports: in
1800 their share had fallen to 283- per cent while cotton fabrics
and yarn had jumped from negligible quantities to 24 per cent.
Before the end of the first decade of the nineteenth century,
cotton, which was essentially a new industry, had outstripped
the ancient woollen industry in the value which it added to
British exports.
More than any other British industry, the cotton industry
depended on international trade. Mass-producing any com-
1
Deane and Cole, British Economic Growth: table 13, p. 44, gives details of these
calculations.
modity depends on access to a large popular market—much
larger than the 7-10 million or so people who lived in Britain
in the last quarter of the eighteenth century. Cotton, however,
was the one commodity that commanded an immediate sale
throughout the known world. The new factory article was cheap
enough to come within the budget of the lowest income groups
and fine enough to be desired by rich as well as poor: it was
saleable in tropical as well as in temperate climates; and it found
a market ready-made for it in the regions which Britain had
been supplying for a century with Indian calicoes. There was
no problem of salesmanship here, of creating a demand, of
persuading people to adopt new tastes. All that had to be done
was to carry this desirable commodity to the markets already
opened up by British merchants and to sell it to all who had
money to buy.
Cotton depended on the international trading network al-
ready built up by British merchants not only for its markets but
also for its supplies of raw materials. For the first time in history
a great staple industry had been established on the basis of a
natural resource that could not be domestically produced. It is
the classic example of the way that economic growth can be
founded on international trade and the benefits of technical
progress can be transmitted from nation to nation in a process
of mutually beneficial exchange. British purchases of raw cotton
put incomes in the pockets of the very people who were willing
to buy the finished product. It provided the incentive for further
technical innovation not only in the factories producing the
finished product but also in the regions which were the source
of the raw material. For example, Eli Whitney's cotton-ginning
machine and the opening up of new cotton lands in the southern
states of America induced a drop in the cost of the raw material,
a further cheapening of the finished cloth and a consequent
enlargement of the demand for it. For the product of the cotton
industry had an important economic characteristic which made
it peculiarly suitable to play a leading part in the industrial
revolution. It was a commodity which enjoyed an elastic
demand, that is to say: when its price fell or when purchasers'
incomes rose, demand for it grew more than proportionately.
The falling costs and prices generated by the opening up of new
high-yielding cotton lands and the invention of the cotton-
ginning machine in the U.S.A., and by the factory system and
textile inventions in Britain, brought a disproportionate
expansion in demand on a world-wide scale. Cotton manufac-
turing proved to be the first 'growth industry' in the modern
sense of the term, for it stimulated a cumulative sequence of
innovation and expansion which spread out over time and space
and set up a wide range of income-creating repercussions. Had
it not been for the lively burst of innovation in the British cotton
industry at the end of the eighteenth century the new United
States of America might have taken another generation to
achieve complete economic independence. 'Had it not been for
the productivity of the virgin upland soil of the United States
the first Industrial Revolution might have been delayed quite
a while.' 1 The largest profits from innovations generally go to
those who adopt them first. It was the network of world trade
built up by eighteenth-century British merchants that enabled
Britain to take the lead in exploring the opportunities offered
by innovations on both sides of the Atlantic.
If the official trade statistics do not allow us to make precise
measurements of the rate of growth of British trade at different
periods in the eighteenth century, they do, since they are
annually available, provide a reasonably clear picture of the
long-term course of this growth. Taken year by year, of course,
the path looks highly erratic. In the days of sailing ships the
frequent incidence of storms, or of wars in different regions of
the world, often produced violent fluctuations in the value of
trade as between one year and the next. Some of the more
ephemeral effects of these year-to-year fluctuations can be
ironed out by the statistical device of taking moving averages
of the figures concerned, but the path remains fairly erratic. It
is probable that if we had an annual series of national-income
statistics for the eighteenth century these would look almost
equally erratic, for climatic variations play a very important
part in determining the flow of incomes in most agricultural
economies.
The path of growth of English foreign trade is illustrated by
the graph on page 68, which traces its course in terms of a
three-yearly moving average of total domestic exports plus total
retained imports—both series measured at offical values. This
graph therefore focuses on the volume of trade which is likely
1
K. Berrill,' International Trade and the Rate of Economic Growth', Economic History
Review (i960).
to have had the most direct impact in the British economy, for
it excludes the value of re-exports both at point of entry into
and at the point of exit from the country.1
An interesting feature of the pattern suggested by the graph
is the existence of two marked discontinuities of trend which
appear in the 1740's and the 1780's respectively. These echo the
60
50
40
30
20
15
10
7-5 t t t t 1 t t
1700 1710 1720 1730 1740 1750 1760 1770 1780 1790 1800
Fig. 1. The growth of foreign trade (net imports and domestic
exports: three-yearly moving averages).
breaks in trend which we have already detected in the output

and population figures. It is not at all surprising that the trade
statistics exhibit discontinuities similar to the output indicators,
for the latter are estimates which are based to a significant extent
on commodities entering into international trade. But the trade
graph, being based originally on annual records, illustrates the
pattern more effectively than output or population statistics
available only at bench-mark dates. Briefly, then, the volume
of international trade traces an erratic but slowly rising course
in the first four decades of the eighteenth century, moves up
abruptly in the 1740's, relapses into an erratic but slow rise
punctuated by wars and ending in the disastrous slump asso-
ciated with the War of American Independence, and then leaps
up again in the 1780's and continues to surge upwards through
most of the 1790's and early 1800's. There is no question of the
enormous significance of the second upsurge, dating from the
1780's, if only because it was sustained. But if we take into
1
The graph is in two sections: one ending in the 1770's based on figures of the overseas
trade of England and Wales, the other starting in the 1770's and based on figures
for Great Britain.
account the fact that part of this upsurge was in effect a rebound
from the artificially low level to which the economy was forced
by the American war, the discontinuity of the 1780's was little
more abrupt than that of the 1740's.
In sum, and in conclusion, the six main ways in which foreign
trade can be said to have helped to precipitate the first
industrial revolution are listed below:
(1) First of all it created a demand for the products of British
industry. One of the problems which faces most pre-industrial
economies is that the level of domestic purchasing power is too
low to justify industrial specialization. Specialization, as Adam
Smith recognized in the 1770's, depends on the extent of the
market; without specialization it is not possible to obtain the
economies of scale and experience which can lower costs and
prices sufficiently to bring a product within the reach of the mass
of the population. This is the vicious circle of a closed economy.
If it is to raise output it must first raise incomes in the
home-market which provides the demand for that output. It
must hoist itself up by its own bootstraps. A large, well-populated
country may have both the natural resources and the potential
market for this kind of self-generating development. A small
country with a small population has very little prospect of
appreciably accelerating its rate of growth of output without
access to a wider market and a wider range of resources than
it can provide within its own borders. It was access to a world
market that broke this vicious circle for Britain.
(2) International trade gave access to raw materials which
both widened the range and cheapened the products of British
industry. Without access to raw cotton Britain could not have
shifted from dependence on an industry with a relatively
inelastic demand (wool) to a technologically similar industry
with a relatively elastic demand (cotton). Unless they had been
able to import Swedish bar-iron, Sheffield cutlers could never
have built up the trade in quality steel which survived into the
period when British bar-iron became good enough to serve their
purpose.
(3) International trade provided poor, underdeveloped coun-
tries with the purchasing power to buy British goods. Trade is
a two-way process. By buying from foreigners, British importers
provided them with the exchange and credit with which to buy
the products of British industry. By buying American cotton,
for example, Britain provided the ex-colonists with purchasing
power which raised their demand for British exports.
(4) It provided an economic surplus which helped to finance
industrial expansion and agricultural improvement. The profits
of trade overflowed into agriculture, mining and manufacture.
Without them the innovators would have found it difficult to
convert the new ideas and rotations and machines into produc-
tive enterprise. It is not enough to know about new productive
methods or would-be purchasers. It is necessary also to have the
capital to finance the plant, the equipment, the stocks of goods
and the ships which are necessary to process and distribute the
manufactured goods. A century and more of successful trading
in overseas markets had enabled British merchants to build up
a substantial fund of cumulated profits which was ripe for
reinvestment when new profit-making opportunities arose
either in trade or in the manufacture of trading goods.
(5) It helped to create an institutional structure and a
business ethic which was to prove almost as effective in
promoting the home-trade as it had been for the foreign trade.
The elaborate network of commercial institutions in the city,
with their numerous provincial contacts, helped to channel
capital funds from regions where they were being accumulated
to regions where they were in active demand. The systems of
orderly marketing, insurance, quality-control and standardiza-
tion of product which grew up out of the needs of the foreign
trade were important aids to improving productivity at home.
Sturdy standards of business honesty, commercial initiative
and adventurous attitudes to risk-taking, which are qualities
essential to sustained economic growth in any sphere, developed
relatively rapidly in the sphere of international commerce, for
without them foreign trade would have been impossible. A more
sophisticated set of attitudes to the role of government policy
in promoting economic prosperity—attitudes that were most
clearly reflected in the free-trade movement—was another
major factor facilitating British economic progress.
(6) Finally, it is worth noting that the expansion of inter-
national trade in the eighteenth century was a prime cause of
the growth of large towns and industrial centres. It is the essence
of an industrial revolution that the balance of the economy shifts
from a primarily agricultural basis to an industrial/commercial
basis. The beginnings of the process lie generally in the growth
of large towns and the scope that these offer for specialization
in economic activities. It was the growth of really big towns like
London, Liverpool, Manchester, Birmingham and Glasgow
that directly stimulated the large-scale investments in transport
which were such an important feature of the early stages of the
British industrial revolution. All these towns owed a large part
of their growth to the overseas trade, and the spectacular
expansion of Liverpool and Glasgow was almost entirely a
function of the foreign trade.
The effect of the commercial revolution, generally attributed
to the period of the late seventeenth century and the first half
of the eighteenth century, was thus to bring a special kind of
maturity to the English pre-industrial economy.1 The mer-
chants trading overseas had learned to operate confidently in an
impersonal, international economy, where the scale of opera-
tions was large and far-flung, and where both risks and rewards
were potentially high. To reduce the uncertainties of these
operations, they had created in the City of London an infor-
mation system, an institutional structure and a business ethic
which together provided a strategic base for expansion of
national and international markets during the period of
accelerating industrialization. By the second half of the
eighteenth century, Britain was a commercially and financially
mature economy in a sense that few mid twentieth-century
developing economies were when they began to promote
industrial growth. She already had an effective home-grown
network of institutions which could channel surplus capital from
regions and activities where it was piling up, to regions and
activities where it was needed, and a body of entrepreneurs
capable of calculating, and insuring against, the risks inherent
in operating on a large-scale, and also capable of locating new
markets and guaranteeing the quality of final goods. The fact
that Britain was already the centre of a world wide network of
international trade and of commercial knowhow was a crucial
element in the process whereby a small pre-industrial economy
with a narrow resource base was able to become the workshop
of the world.
1
Charles Kindleberger, 'Commercial Expansion and the Industrial Revolution',
Journal of European Economic History (Winter, 1975).
CHAPTER 5
THE TRANSPORT REVOLUTION
One of the most significant differences between a pre-industrial

economy and an industrialized economy is that the latter has
a larger stock of capital; in other words, each member of the
industrial labour force has a great deal more physical capital
to assist him in the process of production. This is one of the
reasons for the higher level of productivity that characterizes an
economy which has gone through an industrial revolution. To
the extent that the additional capital is purchased by private
entrepreneurs as they innovate and expand, then the accumu-
lation of the larger national stock is achieved by raising the
proportion of profits which the average entrepreneur ploughs
back into his business.
There are some kinds of capital, however, which cannot be
accumulated in this automatic way because they require capital
outlays out of all proportion to current or immediately expected
levels of profit. This is recognized to be a major stumbling-block
to the economic growth of some of today's underdeveloped
countries. A great deal has been written in recent years about
the ' social overhead capital' which must be provided before an
underdeveloped economy can expand its output of goods and
services at a rate which will produce an appreciable growth in
incomes per head. If we begin to define this 'social overhead
capital' in concrete terms, most of it seems to consist of capital
embodied in basic transport facilities—harbours, roads, bridges,
canals and, nowadays, railways. Without this sort of capital an
economy's richest natural resources may remain inaccessible
and underdeveloped.
Now it is characteristic of such investments (i) that they
require much greater outlays of capital than the individual
entrepreneur can normally be expected to get access to, (2) that
they take a long time to construct and an even longer time to
yield a substantial profit, and (3) that the gross return on the
72
THE TRANSPORT REVOLUTION 73
investment comes indirectly to the community as a whole rather
than directly to the initiating entrepreneurs. The consequence
is that social overhead capital generally has to be provided
collectively, by governments or international financial institu-
tions rather than individuals, and that the mobilization of the
large chunks of capital required is most easily achieved through
taxation or through foreign borrowing. The interesting thing
about the British experience, however, is that it was almost
entirely native private enterprise that found both the initiative
and the capital to lay down the system of communications which
was essential to the British industrial revolution.
Roads, it is true, had always been collectively provided,
largely because they were closely associated with questions of
military security. The Roman roads were built almost entirely
by soldiers, and so at public expense. In manorial times all
landowners were theoretically responsible for the highways
adjacent to their own land, but only where the maintenance of
law and order was at stake was the medieval State likely to
intervene by enforcing the responsibility and levying rates on
those who failed to repair the roads. Except for a few roads of
strategic importance, road building and repair was a matter
of purely local concern, and landlords enforced road-making
obligations on their tenants in the interests of particular estates.
In the towns, and at some bridges, tolls were levied on road-users
to cover the cost of repair. In the sixteenth century, however,
the regulations always implicit in the common law were
tightened up, parish surveyors were appointed and each parish-
ioner was made formally liable for spending a given number
of days each year on the repair of the highways. This was the
system of statute labour which remained the normal method of
keeping the English roads in repair until it was abolished in
1835. It was not very efficient, but while domestic industry
prevailed, and traffic in heavy produce was limited and highly
localized, it worked well enough for the pack-horse trade. By
the eighteenth century, however, English roads were reputed
to be amongst the worst in Europe. The accounts of contem-
porary travellers on the one hand, and on the other, a mounting
flood of legal enactments dealing with the weight of wagons,
the number of horses and the width of their wheels bore
ample testimony to the fact that the traffic was outrunning
the capacity of the roads to carry it. The growing number of
Turnpike Acts, which gave private enterprise the task of
repairing the roads, in return for rights to collect tolls from users,
showed the inadequacy of the statute labour system in
maintaining an economic road system. By 1750 many of the
main London routes and some busy interprovincial routes had
been turnpiked and it has been estimated that the costs of land
carriage were lower in the 1750's than they had been at the
beginning of the eighteenth century.1 Over the period 1751-72,
a turnpike mania developed, giving rise to 389 Turnpike Trusts,
more than in either the preceding four decades or the following
6f decades.2 Another sharp, but less well-sustained, upsurge in
Turnpike Acts took place in the 1790's, and by the mid 1830's—
on the threshold of the railway age—there were over 20,000
miles of main road controlled by Turnpike Trusts, collecting
an annual total of over £0*5 millions in tolls.3
Not all turnpike roads were good roads. Contemporary
travellers had some hair-raising stories to tell about their perils.
But the evidence suggests that the Trusts were generally more
effective in providing roads suitable for the continuous carriage
of heavy traffic than the system of statute labour. In most
villages the days devoted to statute labour on the roads were
social occasions rather than working days. Many a small parish
on a busy national route, such as the Great North Road, could
not afford to keep its stretch in adequate repair. Many of the
turnpike operators were also inefficient, irresponsible and
corrupt, but the fact that their profits depended directly on their
roads being passable was a stronger incentive than that
motivating the parish authorities; they were more likely to
employ specialized and successful road engineers and new
techniques than was the parish. Moreover the existence of
the toll-gates on the turnpikes made it easier to enforce
legislation against the heavy wagons and narrow wheels which
tended to tear the road surface to ribbons.
What the new techniques of road-making did, in effect, was
to produce the kind of roads which would stand up to heavy
traffic over long periods of time and were passable throughout
a normal British winter. Actually the techniques were not as
new as they may have seemed. John Metcalf's system was
essentially the same as that used by the Romans: he began with
1
William Albert, The Turnpike Road System in England 1663-1840 (1972), p. 186.
2 3
Ibid., p. 49. Ibid., p. 189.
a solid foundation of stone blocks and covered them with several
layers of stone chippings, ramming them down hard into the
cracks and producing a slight camber to assist drainage. Other
methods were merely a variation on this. Telford, for example,
started with two layers of three-inch stones before laying seven
inches of broken stones and finishing with one inch of gravel.
Macadam made a less expensive, if less durable, surface by using
several layers of broken stones instead of the larger blocks and
then finished with several layers of small chips which eventually
settled to form a smooth hard surface. The new roads were
passable in wet weather and durable and they served their
purpose well. Except for the introduction of the steam-roller in
the 1860's to hard-pack the stones, there was little development
in the technique of road-making until the advent of the motor-car
at the end of the nineteenth century.
It was not until well into the nineteenth century, however,
that the scientific road-making methods developed by the new
genus of road engineer, typified by Metcalf, Macadam and
Telford, were applied generally. As late as 1815 it is doubtful
whether more than 1,000 miles of highway had been laid down
according to their principles and hence laid down to last.
Nevertheless, though good roads remained rare, there is evi-
dence to suggest that, taken over-all, standards of road main-
tenance rose markedly over the period 1750-1830 and that
improvements made to certain crucial main roads had had
notable effects on the speed, regularity and comfort of travel.
This was the era of the stage-coaches. Whereas it had taken four
days to go from London to York in 1754, by 1785 one could go
from London to Newcastle in only three days. The journey from
London to Birmingham, which took two days in the 1740's, was
accomplished in 19 hours in the 1780's. In 1754 the coach from
London to Bristol took two days for the journey: by 1784 some
coaches did it 16 hours. As the journeys became speedier and
more comfortable the traffic thickened. In 1756 only one coach
a day went between London and Brighton—by 1811 there were
twenty-eight coaches a day. By 1820 it was calculated in a
contemporary periodical that c a person has 1,500 opportunities
of leaving London in the course of twenty-four hours by stage
coaches'.1
1
Quoted from the Scots Magazine of 1820 in L. Gardiner, Stage-Coach to John 0' Groats
(1961), p. 6.
Goods, of course, moved much more slowly than passengers.

The 'fast' vans which plied on certain main roads could reach
five miles an hour on the well-kept London-Birmingham route,
but most goods that went by road travelled at a more leisurely
pace in stage-wagons, and if the district was hilly the pace was
a crawl. It took 24 hours for stage-wagons to do the 45 miles
between Manchester and Leeds and 40 hours to accomplish a
similar distance between Sheffield and Manchester: eyen as late
as 1829 t n e normal speed of the wagons between Newcastle and
Carlisle was 19 to 20 miles a day.
Some improvement in the roads dates from the 1750's, before
the industrial revolution had gathered momentum sufficiently
to add greatly to the internal traffic of goods. It was largely a
consequence of the growth of towns with their mounting
demands for basic food and fuel supplies which had to be drawn
from a wider and wider agricultural hinterland. The main
driving force for road improvement throughout the country was
London. Most of the new roads and the best-kept roads led to
London, although the influence of other towns—Liverpool,
Birmingham and Manchester for example—began to show itself
in the quality of their feeder-roads as the century wore on. The
growing towns called for rapid and regular transport of
foodstuffs and fuel over distances of 30 to 50 miles or so, and
for comfortable, safe and speedy transport of passengers and
mail between the main towns; and it was this kind of localized
or light traffic that benefited most directly and impressively.
The extent of the improvement may perhaps be gauged from
the evidence of a clergyman before the 1808 Highways Com-
mittee, to the effect that three horses could then do what five
had been required for 30 years before, and from Jackman's
avowedly conservative estimate that ' on the great highways of
trade the time consumed on a journey between the termini of
the longer routes was in 1830 only from one third to one fifth
of what it had been in 1750'.1
If Britain had had to depend on her roads to carry her heavy
goods traffic the effective impact of the industrial revolution
might well have been delayed until the railway age. She started
off, however, with transport advantages which none of her
contemporary rivals could equal. The cheapest way of trans-
1
W. T. Jackman, The Development of Transportation in Modern England, vol. i (1916),
P- 339-
porting bulky, weighty, goods was by water and Britain scored

heavily in this respect by being narrow and insular—no part
of the British Isles is more than 70 miles from the sea—and by
having a considerable length of river which, if not naturally
navigable, could readily be made so. The sea-coast route was the
main highway of the British Isles in the eighteenth century and
that required relatively little in the way of maintenance except
to harbour installations. Adam Smith, exaggerating a little
perhaps, declared that 'Six or eight men by the help of water
carriage can carry and bring back in the same time the same
quantity of goods between London and Edinburgh as 50
broad-wheeled wagons attended by a hundred men and drawn
by 400 horses'.1 London indeed was built up on the strength
of its sea routes, and the growth of this vast city—it had more
than half a million inhabitants at the end of the seventeenth
century and more than a million at the end of the eighteenth
—was an important factor in England's transition from a
regionally based subsistence economy to an integrated exchange
economy. A fleet of vessels averaging a little over 200 tons in
weight plied along the eastern coast between the Scottish ports
and Newcastle, Hull, Yarmouth and London bringing coal,
stone, slate, clay and grain, commodities whose transport
through the miry roads of eighteenth-century England would
have cost a fortune. According to Clapham the major portion
of the coasting trade existed that Londoners might be housed,
warmed and fed.2
The sea had its hazards and delays, of course. Shipping might
be held up in the Tyne and the Thames for weeks in succession
in stormy seasons. When war broke out ships and seamen were
liable to be summarily pressed into the navy and foreign
privateers menaced the English sea lanes. Heavy duties were put
on coastal shipping and enormous losses are reported to have
resulted from the pilfering of the London dockers. Nevertheless,
for all its vicissitudes coastal shipping was the main means of
handling bulky, heavy commodities in the eighteenth century
and without it there could have been no large-scale heavy
industry and no large towns.
No revolutionary developments took place in coastal shipping
during the late eighteenth and early nineteenth centuries and
1
Adam Smith, Wealth of Nations, Cannan ed., vol. I, p. 20.
2
Clapham, Economic History, vol. 1, p. 4.
it is to the transformation of the inland system of water
navigation that we must look for the most spectacular and
typical innovations of this period. The industrial revolution
called for a reliable, high-capacity, low-cost transport system
and this is what the canals provided. Moreover they were of the
essence of the industrial revolution in that they were man-made,
that they represented an application of scientific knowledge to
practical engineering problems, that they catered for a mass
market (albeit a producers' market) and that they involved
heavy capital outlays involving a long time-horizon.
The canal age took place mainly in two hectic bursts of
construction; the first in the 1760's and early 1770's was inspired
by the success of the Duke of Bridgewater's canal between
Worsley coal mine and Manchester and then stifled by the trade
recession resulting from the American War; the second started
up in the 1780's, after the war was well over, and became a
national mania in the 1790's. It had been preceded by a century
and a half of steady river improvement also financed
capitalistically by groups of local landowners and businessmen.
It has been established that by the end of the eighteenth century som^
2,000 miles of navigable water existed in England, of which
approximately one third was in the form of canals built between 1760
and 1800: one third was in the form of 'open' rivers which were
naturally navigable: and the remaining third had been created as a
result of the work of engineers, chiefly between about 1600 and 1760. *
It may seem surprising that a few hundred miles of canal could
make a significant addition to the basic industrial communi-
cations of an economy of the size and complexity of England.
But the canals were not cut into an empty map. Often a short
canal represented the last strategic link in a network of navigable
rivers and its construction might bring to fruition investments
on river improvement made over a century before.
The main motive-power behind the early development of the
canals was the same as that which was gradually pushing up
the standards of the roads at this period. It was the growth of
the towns. Later the prospects and needs of large-scale industry
helped to rocket the canal age into its grand mania; but, to
begin with, the operative force was the towns with their
1
Skempton, in Singer, Holmyard, Hall and Williams, History of Technology, vol. m,
p. 456.
insatiable demand for coal to supply fuel for domestic needs and
for the whole host of little industries that are required even in
a pre-industrial community—bakeries, smithies, tanneries,
sugar-refineries, breweries. It must be remembered that apart
from coal there was no fuel available in eighteenth-century
England other than wood and this was already an exhausted
resource in most centres of population and industry. 'The fuel
famine of the eighteenth century would have stopped the
growth not solely of industry but of population in many districts
had not means been found for overcoming it." The canals were
the means. More than half the Navigation Acts passed between
1758 and 1802 to set up a canal or river-improvement company
were for concerns whose primary aim was to carry coal. This
was one of the crucial bottlenecks that had to be broken before
the industrial revolution could take shape in England. It was
crucial, first because it removed the main barrier to the
urbanization which is generally associated with industrialization
as both cause and effect; and secondly because the first
industrial revolution grew up on a basis of coal and iron and
it was necessary to be able to move these bulky raw materials
and their finished products quickly and cheaply across the face
of the country.
The first wholly man-made inland navigation in this country
was the Sankey Brook, inspired by the coal needs of Liverpool,
then Britain's premier port outside of London. But it was the
Duke of Bridgewater's Canal from Worsley to Manchester that
is generally regarded as the first great achievement of the canal
age. Built by James Brindley, it was designed to carry coal from
the Duke's colliery at Worsley to the up and coming industrial
town of Manchester. It was an immediate social and commercial
success. Its tunnel at Worsley and its aqueduct at Barton were
engineering achievements which stirred the imagination of a
public that believed passionately in man-made improvement.
The fact that it halved the price of coal in Manchester further
impressed itself on hard-headed businessmen and wealthy
landowners and encouraged them to risk their savings, mortgage
their lands and borrow from their relatives to finance similar
expensive schemes of capital accumulation. Eight years later
Birmingham businessmen had a similar success with the opening
1
Glapham, Economic History, vol. 1, p. 78.
of the first section of the Birmingham canal, and by the end of

the century the Hereford-Gloucester canal had reduced the
price of coal at Ledbury from 24.S. to 13^. 6d.1
Success on this grand scale was bound to encourage imitation.
It is amazing nevertheless that so much private capital was
raised in England to finance the construction of costly capital
assets which generally took several years before they began
earning at all and which could not, in the nature of things, be
expected to yield a quick return. The Duke of Bridgewater's
canal cost nearly a quarter of a million pounds to complete
—which was a great deal of money at a time when the average
Lancashire labourer earned less than £20 per annum; it took
five years to complete it as far as Runcorn and another nine
years to link up with the Mersey so that vessels could go on to
Liverpool. The Leeds and Liverpool Canal took 46 years to
complete and there were many which took 10 years or more.
Yet by 1790 between -£2 and £ 3 millions had been spent on
canal construction, and in the nine years (1788—96) of the canal
mania Parliament had authorized the expenditure of nearly
£10 millions on canals and inland navigations. The work thus
enthusiastically begun continued steadily in the first quarter of
the nineteenth century, and by the beginning of the railway age
in the 1830's about £20 millions had been invested in the
construction and improvement of British inland navigation. At
their peak in 1858 the inland waterways of Great Britain
reached a length of about 4,250 miles.
Where did all this capital come from? For the most part it
was raised locally in the region the canal was to serve. ' I t was
only among men to whom solid advantages were promised that
money could be got for a canal that might take many years to
build.' 2 Sometimes a local landowner or industrialist took the
initiative and used his lands or his stock as collateral for
borrowing the money; colliery owners like the Duke of Bridge-
water or industrialists using heavy raw materials like Josiah
Wedgwood, the pottery manufacturer, had most to gain.
Occasionally a local merchant was able to raise the bulk of the
funds necessary to cut a short canal. In most cases the new
navigations were the product of corporate enterprise initiated
by local businessmen and landowners and supported by local
1
Clapham, op. cit. vol. i, p. 78.
2
Charles Hadfield, British Canals (1959), p. 34-
THE TRANSPORT REVOLUTION 8l
shareholders and bankers and city corporations and even
sometimes by universities. During the mania the geographical
basis of the capital raised for the canal companies began to
spread beyond the regional level and many individuals with
quite small capital resources and no direct interest in the
enlargement of transport opportunities were tempted by the
offer of glittering prizes to have their flutter among the canal
shares.
There is no doubt that some of these ventures paid off
extremely well. 'Fantastic dividends were sometimes paid—the
Oxford Canal for instance paid 30 % for more than 30 years-
-although the average dividend was under 8%. M The shares
of the old Birmingham Canal, originally £ 140 each, were selling
at £900 in 1792, at the height of the canal mania, and by 1825
an eighth share of this canal, originally worth £17. 10s., was
selling for £355. A writer who picked out the ten most successful
canals in 1825 calculated that they were then paying an average
of 27*6 per cent.2 Not all the canal companies fulfilled the hopes
of their investors, however. Some of the projects foundered on
unexpected engineering difficulties, some on post-war depres-
sion and some on the inefficiency of their managers. Jackman
has estimated, for example, that 'fully one half of the number
of canals and probably considerably more than one half of the
capital expenditure realized returns that were inadequate in
order to maintain the canals as effective agents for the work they
were intended to accomplish'.3
In the last analysis, however, it is inappropriate to judge the
contribution of the canals to British economic growth in terms
of the returns they yielded to their shareholders. What mattered
was that the coal got to the consumers at reasonable prices, that
the iron-foundries and potteries could reduce costs, that the
factory worker could warm his family in winter and still have
some money left over to buy the products of British industry and
that the bread-and-cheese-eating labourers of Southern
England could have cooked meals occasionally. In these terms
the Canal Age made a massive contribution to the first industrial
revolution and was a worthy forerunner of the railway age.
Asa Briggs, The Age of Improvement (1959), p. 30.

Quarterly Review, xxxn, quoted Clapham, Economic History, vol. 1, p. 82.
Jackman, Development of Transportation, vol. 1, p. 426.
Throughout the country, stone for building, paving and roadmaking;
bricks, tiles and timber; limestone for the builder, farmer or blast
furnace owner; beasts and cattle; corn, hay and straw; manure from
the London mews and the mountainous London dustheaps; the heavy
castings which were coming into use for bridge-building and other
structural purposes—all these and whatever other bulky wares there
may be, moved along the new waterways over what, half a century
earlier, had been impossible routes or impossible distances.1
In effect, what the canals did was to make possible enormous
ultimate savings in man-power and horse-power at the cost of
heavy preliminary outlays of capital. A single horse plodding
along a canal towpath typically dragged a load of 50 tons of
merchandise; on the banks of a navigable river its average load
was 30 tons: on iron rails it pulled 8 tons and on macadam roads
2 tons. The typical goods carrier of the early eighteenth century,
the pack-horse, carried an average load of only about one-eighth
of a ton. The effect was to produce what a development theorist
would describe as a 'radical transformation of production
functions'; for it revolutionized the respective contributions
of the main factors of production—labour, capital and
natural resources—to the business of transport; and it permitted
significant savings in raw materials and in the kind of capital
that gets tied up in stocks of goods when delivery dates are
uncertain.
In addition it is worth noticing that the canals produced a
new class of investor, the canal shareholder, a non-participant
investor who was readily transformed into a railway shareholder
when the infinitely greater demands for railway capital were
made in the 1830's and 1840's. This was an important new
development. Most economies in the early stages of industria-
lization have some economic surplus, the problem is to channel
it into the kind of large-scale investments which do not guarantee
immediate return and which may be of more value to the
community as a whole than to the chief investors. Even where
incomes are unequally distributed it is rare to find many
individuals with the enterprise, the far-sightedness and the access
to capital necessary to launch one of these ventures. The Duke
of Bridgewater was a rarity in eighteenth-century England.
Hence the development of the joint-stock company system,
1
Clapham, Economic History, vol. i, p. 79.
whereby a large group of impersonally associated individuals
could pool their capitals in a corporate venture, was a major step
in permitting private enterprise to undertake costly capital
projects on a wide scale. The joint-stock company established by
Act of Parliament was not, of course, a new institution in the
second half of the eighteenth century but it was the canal age
that familiarized the small saver with this type of investment.
One consequence of building up the social overhead capital
involved in the canal network by the agency of private enterprise
was that it was not very efficiently done. The miscellany of
widths, depths and transport charges made the network less
integrated than it could have been. The opportunities open to
some carriers to charge monopolistic rates limited the social gain
and restricted the potential traffic; the nil returns which
characterized a large proportion of the capital invested and the
fantastically high share prices of the mania resulted in some
capital wastage: and many of these wastages could have been
avoided had there been effective centralized planning of the
canal network. Nevertheless the job was done, and before the
railway age revolutionized the transport situation a second
time, England had been endowed with a solid and worth-while
capital asset in the shape of more than 2,000 miles of heavy-traffic
lanes, many of which are still in economic use today.
The canals were not the only examples of heavy, privately-
initiated expenditure on social overhead capital in the late
eighteenth and early nineteenth centuries though they were
certainly the most spectacular. Even while the canal age was
in progress a considerable extension of British dock and harbour
capacity had been achieved. It began effectively with the
foreign-trade boom in the last quarter of the eighteenth century.
During the whole of the first three-quarters of the eighteenth
century less than 150 acres of dock and basin accommodation
were constructed in England: but during the last quarter of the
century this accommodation was doubled and in the first three
decades of the nineteenth century the total area of dockland
expanded by over 4,700 acres; that is, by more than ten times
its area in 1799.
In London, whose trade had doubled in the course of the
eighteenth century, nothing was done to extend the docks until
the French war made their improvement desperately urgent
and precipitated the first London dock boom. Between 1799 and
1815 capital authorized by Parliament for the London docks

exceeded £5^- millions; and before the 1820's Liverpool and
Bristol in the west and Hull and Grimsby in the east had spent
nearly £2 millions in dock construction. This was only the
beginning. 'There was hardly a port of any size or a threatened
part of the coast where improvements had not recently been
undertaken or were not in hand during the middle twenties.'1
Moreover, this was a sphere of capital formation in which
private enterprise was not the only operator. Government
(central and local) also played a direct, if unspectacular, part.
Public expenditure on docks and harbours was averaging over
a million pounds per decade in the second and third decades
of the nineteenth century.
On the face of it, the new forms of capital formation (the
canals, for example, the macadamized roads and the bigger and
better docks and harbours) were expensive in terms of a factor
of production in which a pre-industrial economy is generally
poor, namely capital. Certainly they required massive initial
outlays on projects which often did not yield a commercial
return for a period of five to ten years from the raising of the
capital. To begin with it would appear that the transport
innovations of the period 1750—1830 were capital-intensive, in
that they required a relatively high input of capital per unit of
output produced.
This is true up to a point, but only up to a point. First it must
be remembered that when it is said that a pre-industrial
economy is short of capital what is meant generally is that it
is short of productive capital. By the standards of most of the rest
of the contemporary world and of many present-day under-
developed countries in Asia and Africa, England was a relatively
affluent country in the eighteenth century and was not abso-
lutely short of capital in the broader sense. There was a good deal
of capital invested in the Funds, in land, and in game preserves
and country-houses in the second half of the eighteenth century,
that was yielding a very low return indeed, in either money or
in goods and services, compared with what it could be made
to yield in canals and turnpike trusts. To the extent that the
canals drew finance away from the Funds or from the building
of country houses, say, they were making more productive use
1
of existing capital resources and to that extent might be

regarded as capital-saving in their effect.
Secondly, and more importantly, the successful canals and
the well-managed turnpikes made it possible to economize
directly in capital resources in a number of significant ways. A
large part of the capital of a pre-industrial economy has to be
tied up in stocks of goods. By shifting goods rapidly and
regularly across the face of the country, the canals made it
possible to reduce the volume of goods in transit at any one point
of time and to save incalculable loss through deterioration or
highway robbery or petty pilfering: for the longer a consignment
was en route the less likely was it to reach its destination intact
and in good condition. The new roads and canals also achieved
spectacular reductions in the costs of heavy raw materials. All
these factors permitted the commercial and industrial commu-
nity to economize in their stockholdings. Traders who could rely
on placing an order for vital supplies and of obtaining delivery
within a matter of days, not weeks, could keep smaller stocks
in their warehouses. Factory owners who had been dependent
on delivery of coal by sea had been forced to hold substantial
stocks on the site to ensure continuous working during the
winter storms that kept the coasting ships in port; when they
had a regular supply floating down the canals they could
dispense with a large part of these emergency stocks. The fact
that coal was cheaper in the industrial areas served by canals
further reduced the amount of capital required for stockholding.
For some goods—foodstuffs in particular—costs of efficient
storage were high, and small stocks combined with safe and sure
regular deliveries meant a considerable saving in wastage costs.
Capital economies were also achieved through the rapid and
regular movement of people on the stage-coach and posting
routes. London bankers could send their agents regularly to the
country towns. Commercial information—on gluts or scarcities
of particular commodities for example, or on the state of the
uncut harvest—could be quickly sent from one region to
another. Credit and insurance facilities were more easily ar-
ranged on the basis of personal contact. Currency could be
swiftly and relatively safely shifted to areas where it was in short
supply. The fact is that an efficient market, whether it be in
goods or capital or men or ideas, depends largely on a rapid
and free flow of information as well as of things. It is this freedom
of communication that keeps prices down, renders entre-
preneurial decisions more likely to be the right decisions and
helps to facilitate the rapid spread of cost-reducing innovations.
It is always difficult to assess the value of easy personal contact
in facilitating trading relationships but there seems little doubt
that it was an important factor in creating a more integrated
and confident business community in this country.
On balance, then, it is doubtful whether the developments
in transport which occurred during the period 1760-1830 were
capital-intensive in their final effects on the national economy.
They may have raised the level of national saving by attracting
to capital formation resources that would otherwise have been
spent on current consumption purposes by governments or
individuals. If they did, the evidence does not point to a
substantial increase in the rate of saving due to this cause. What
they certainly did was to permit a more economical and
productive use of existing capital resources and there is no
evidence that, except very temporarily at the height of the canal
mania, they competed with other industries for the supply of
capital. On the contrary, there were a number of ways in which
they evidently freed capital for other uses—by economizing in
traders' and industrialists' stocks, for example, by freeing horses
for agricultural purposes, by saving entrepreneurial time and
by facilitating credit negotiations.
The transport revolution did not of course end in 1830, for
of all the industries whose transformation made the industrial
revolution, transport seemed to have the most inexhaustible
capacity to innovate. Railways, steamships, tram-cars, motor-
cars, aeroplanes—the list seems endless and the economic
consequences of each have been complex and far-reaching. For
the moment, however, it seems particularly worth emphasizing
that the transport revolution had effectively begun and was
affecting the productivity of the economy as a whole before the
changes in other industries were at all sizeable in their impact,
and that it was an absolutely crucial factor in facilitating the
cost-reducing innovations which characterized the other
transforming sectors of the first industrial revolution.
CHAPTER 6
THE COTTON INDUSTRY
It is convenient to regard the first industrial revolution as

consisting of not one but a galaxy of revolutions in the traditional
system of economic activity, each springing in part from an
independent set of causes and each interacting with the others
to produce cumulative effects, the causes of which it is very
difficult to disentangle. The four associated revolutions which
have been considered in the four preceding chapters can each
lay some claim to having helped to precipitate and condition
the industrial revolution proper. So long as we do not fall into
the trap of supposing that they effectively preceded it in time,
instead of being an integral part of it, we might say that the
demographic revolution, the agricultural revolution, the com-
mercial revolution and the transport revolution were the most
important preconditions of successful industrialization and the
sustained economic growth which goes along with it.
Now it is time to come to grips with the process that is
generally assumed to be at the heart of the first industrial
revolution, that is the growth of modern manufacturing industry
and all that this implies—large-scale units of operation, labour-
saving machinery, and regimentation of labour, for example.
There were two industries which more than any others first
experienced the early revolutionary changes in technology and
economic organization that made Britain the 'workshop of the
world'. They were cotton and iron. It seems to be generally
agreed that the prime mover was the cotton industry. This is
the industry which Professor Rostow, for example, has described
as the 'original leading sector in the first take-off'1 and to which
Schumpeter referred when he asserted that ' English industrial
history can (i787-1842). . .be almost resolved into the history
of a single industry'. 2 There seems to be no doubt of the
1
2
J . A. Schumpeter, Business Cycles, vol. 1 (1939), p. 271.
87
tremendous importance of the cotton industry in the British
industrial revolution. The interesting question is why cotton
rather than any other industry should have led the way and how
a single industry came to play such an important part in
reshaping the economy of a nation.
Textile manufactures had constituted an important part of
the English national product for centuries. But it was in the
woollen manufacture that England especially excelled on the
eve of the industrial revolution. There were reasons for this.
Sheep flourished on the English pastures and yielded a high-
quality wool. The finished product was particularly acceptable
in cool latitudes and English manufacturers had developed skills
which had enabled them to produce exceptionally fine woollen
cloth.
By contrast the cotton industry was backward, small, and
unable to compete with Indian calicoes or muslins in either
quality or price unless protected. Its finished product was a
compound of linen warp and cotton weft; its expansion was
restricted, on the demand side by the limited market for these
coarse cottons, and on the supply side by the relatively low
productivity of spinners dependent on the ancient hand-wheel.
Like wool it was a domestic industry in which all members of
the household played their part. Children did much of the
labour of the preliminary operations such as cleaning and
carding the raw cotton, and they assisted the weaver. Women
span the yarn; men wove the cloth. Many households treated
it as a subsidiary occupation to agriculture and it provided
casual employment in seasons when the demand for labour was
at a low ebb. Except in Manchester itself, most weavers were
also farmers. The raw cotton came largely from the Levant, the
southern States of America and the West Indies and was dearer
per pound than best English wool. The final product was rough,
difficult to sew and difficult to wash. The aggregate gross value
of cotton textiles produced was quite small: a contemporary
estimate put the value of its annual sales at a mere £600,000
in the early 1760's. At that time its exports averaged an annual
value of a little over £200,000 at official prices: for woollen
goods the corresponding export value was about £5^- millions.
The first of the series of major textile inventions applied to
wool as much as to cotton but they were slow in developing in
either branch. They were (1) Kay's flying shuttle, which was
THE COTTON INDUSTRY 89
first introduced in the 1730's and began to be adopted widely

by the cotton weavers in the 1750's and 1760's, and (2) Paul's
carding machine, patented in 1748, which began to find its way
into Lancashire about 1760. These two inventions intensified
the bottleneck which was already in evidence in the spinning
branch of the cotton industry. It took three or four spinners to
supply one weaver with material by the traditional methods,
and where the fly-shuttle speeded up the weavers' operations
the shortage of yarn became acute. It was practically impossible
to get any yarn for weft in the harvest season when women could
earn an equivalent wage less laboriously in the fields.
Meanwhile there was pressure on the demand side too. There
was a marked improvement in the foreign market for cotton
manufactures in the 1750's (largely due to the East India
company's difficulties in maintaining the Indian supply) and
this continued into the 'sixties, as continental markets were
developed. At the same time British population and domestic
incomes were increasing and it may be supposed that home
demand was rising in step. It is not therefore surprising to find
that prizes were being offered in the early 1760's to encourage
inventions which would increase the productivity of the spinner
and the quality of the yarn.
Hargreaves' spinning-jenny, invented probably around 1764
and patented in 1770, was not the first spinning machine—the
inventor Paul had been machine-spinning cotton at his mill in
the 1740's and there were other early attempts too—but it was
the first wholly successful improvement on the age-old device
of the spinning wheel. In its earliest form it contained eight
spindles: the patent specification in 1770 mentioned sixteen
spindles: by 1784 the number had increased to eighty and by
the end of the century the large jennies were capable of holding
100 to 120 spindles. At once therefore the effect of the invention
was to multiply many times the amount of yarn that could be
spun by a single operator. It saved labour just where labour had
been so scarce. The success of the jenny was immediate. It was
not perfect, but it produced a satisfactory yarn for weft; in the
smaller sizes it was relatively cheap to buy and to house and
its mechanism was so simple that it could be operated by
children, again in the smaller sizes. The very large factory-jennies
were generally operated by a man with several child helpers.
It was adopted rapidly and it was rapidly improved. The family
go THE FIRST INDUSTRIAL REVOLUTION
spinning-wheels were hastily consigned to the lumber room and
their place taken by the new jennies. In the words of a
manufacturer who lived through this era: 'From the year 1770
to 1788 a complete change had gradually been effected in the
spinning of yarns. That of wool had disappeared altogether and
that of linen was also nearly gone: cotton, cotton, cotton has
become the almost universal material for employment.' 1
But the invention which more than any other laid the basis
for the revolution in cotton was the water-frame, patented by
Arkwright in 1769. For this, for the first time, produced cotton
yarn strong enough to serve as warp as well as weft and thus
created a new product—a British cotton cloth that was not a
linen-mixture. Unlike the jenny the water-frame was a factory
machine from the beginning: it was designed to be horse-
operated but was powered first by water and later by steam.
This was the real beginning of the departure from domestic
industry. A few years later Crompton's mule (patented in 1779)
combined the principles of the jenny and the water-frame and
produced a smoother and finer yarn. This enabled the British
producer for the first time to outclass the Indian producer in
the quality of his cloth, and with later improvements the
finished product grew finer and stronger. In 1785 Arkwright's
patent was cancelled and the water-frame became available to
all; and in the same year a Boulton and Watt steam-engine was
used for the first time to operate a spinning-mill. Thus within
a few years the most crippling limitations on the output of the
industry were removed; a new system of production, large-scale
factory industry, became feasible; and the way was opened to
the development of what was for British industry an entirely new
range of products suitable for a mass market.
The effects of the water-frame and the jenny show up in the
statistics of raw cotton imports as early as the 1770's, but it was
after the end of the American War, in the 1780's and 1790's,
that they begun to multiply. Between 1780 and 1800 there was
an increase of about eightfold in raw-cotton imports; and since
the yarn spun grew finer on the average, as well as stronger,
the raw material imports understate the increase in yardage and
real value. The machinery was elaborated and improved. By
1812 'one spinner could produce as much in a given time as 200
could have produced before the invention of Hargreaves'
1
W. Radcliffe, The Origin of Power Loom Weaving (1828), p. 62.
THE COTTON INDUSTRY gi
jenny'. These developments changed the whole character of the

industry. Spinning began to be concentrated in factories.
Weavers could rely on uninterrupted supplies of yarn and could
afford to give up their agricultural activities, which had once
provided most of their income, in order to engage full time in
manufacture. Their numbers increased rapidly. They began to
crowd into the towns. Improvements in other technical processes
helped to accelerate the rate of growth of the cotton industry
and to remove it further and further from the domestic system.
There were improvements in bleaching and dyeing; carding,
scutching and roving machines were introduced; steam-power
made it possible to locate factories where no water-power was
available; the introduction of Whitney's ginning machine in the
United States in the last decade of the century provided another
major impetus by greatly reducing the price of the raw material.
Curiously enough the weaving branch of the industry lagged
behind in the modernization of the cotton manufacture. There
was distress among the weavers of coarse cottons even before
the end of the eighteenth century—their markets had never
been unlimited and were easily saturated. The power-loom was
adopted only very slowly. Cartwright invented an imperfect
machine in 1787 and set up a factory at Doncaster which closed
two years later when the inventor went bankrupt. A Manchester
firm which introduced it experimentally in 1791 found itself in
opposition to its workers and had its factory burned down in
consequence. A number of improved machines were tried out
in the following decades but the power-loom remained experi-
mental until after the Napoleonic wars. When eventually the
power-loom began to be introduced on a considerable scale in
the 1820's, 1830's and 1840's the displacement of the hand-
loom weavers, still clinging to their independence in spite of
the relentless downward pressure on their wages, was achieved
at the cost of much social distress.
Within a little more than a quarter of a century the cotton
manufacture graduated from being one of the least significant
industries (Adam Smith's Wealth of Nations, published in 1776,
has one glancing reference to it) to one of the most important.
By 1802 it probably accounted for between 4 and 5 per cent
of the national income of Great Britain, and by 1812 when its
share was estimated to be between 7 and 8 per cent it had
outstripped the woollen industry in national importance. At this
stage there were about 100,000 workers in cotton-spinning
factories and probably another quarter of a million weavers and
their auxiliaries working on cotton goods. By 1815 exports of
cotton textiles account for 40 per cent of the value of British
domestic exports and woollen goods for 18 per cent, and by 1830
more than half the value of British home-produced exports
consisted of cotton textiles. In real terms (i.e. in yards of cloth
produced) the growth of the cotton industry was even more
impressive, for prices fell at a speed which has no precedent in
the history of manufacturing industry, while quality rose. Since
the innovations were mainly concentrated in the spinning
branch of the industry it was at the yarn stage that the price
fall was most impressive, particularly when falling costs in
spinning were reinforced by falling raw-material costs, due to
the introduction of the cotton gin, in the southern States of
America. Prices of cotton yarn fell from 38^. per lb. in 1786 and
1787 to under 10s. in 1800 and 6s. gd. in 1807. Demand proved
to be elastic, and as prices fell the amounts sold expanded more
than proportionately. Even so, the market would have been
readily saturated by the immense capacity of the factory system,
had it not been possible to exploit the international contacts
which British merchants had been building up for the previous
century and to supply a steady succession of new foreign
markets. By the 1780's the volume of exports (i.e. exports valued
at constant official prices) was flowing at a rate which was
between three and four times its volume in the 1760's, before
Hargreaves'jenny had come on the scene; by the first decade
of the nineteenth century the flow was ten times that of the
1780's; and by the end of the Napoleonic wars it had trebled
again. All this was something quite new in industrial experience.
It caught the imagination of contemporaries and provided a
dramatic object-lesson in the profitability of mechanization.
Various explanations have been advanced for this spectacular
breakthrough in the cotton industry. It has commonly been
argued that the relative insignificance of the industry at the
beginning of the transformation militated in its favour. Eco-
nomic change in the woollen industry, for example, was
inhibited by the opposition, or inertia, set up by powerful vested
interests. The silk industry, to take another example, had
proved itself to be a convenient source of public revenue and
was crippled by import duties: and like the linen industry it was
hindered by the fact that its raw material was in any case in
inelastic supply.
But if the cotton industry was new it was not so different from
the other textile industries that it was technologically strange.
Most English families had eked out their earnings by engaging
in some kind of textile-manufacturing process. The skills, the
techniques, the institutions and the processing industries which
had long served the other textile trades could serve the new
industry just as well. The new factory system did not imme-
diately displace the old domestic industry: for a while it
supplemented and strengthened it. The tens of thousands of
little men who operated jennies and looms in extensions to their
cottages provided the industry with buildings and machinery
which would have required hundreds of wealthy capitalists to
set up on a factory basis. It was this more than anything else
that permitted the immediate expansion of capacity in response
to technological opportunities and market demand. The costs
and risks of the new industry were more widely spread than
they would otherwise have been and were more readily under-
taken because of this. 'One cannot avoid the conclusion',
writes an authority on the eighteenth-century cotton industry,
' that the new machinery spread quickly in England because the
whole community was interested in it.' 1
Another way of looking at it is to say that the cotton industry's
success depended largely on the fact that it made demands on
factors of production which it was well within the power of the
British economy to meet. It was labour-intensive, for example,
rather than capital-intensive. In so far as it needed skills—the
weaver's skill for example—these were in relatively abundant
supply: there was a veritable army of under-employed weavers
in eighteenth-century England. It also used the labour of
women and children; and in a pre-industrial country with a
rapidly rising population an industry which makes use of female
workers and pauper children is an industry with an abundant
labour supply. In so far as it required capital this was not large
in relation to the return that was expected of it—in terms of
modern growth-theory it was an industry with a relatively low
capital-output ratio—and the task of providing and maintain-
ing capital equipment could, as it happened, be spread over
1
Julia de L. Mann in A. P. Wadsworth and J. de L. Mann, The Cotton Trade and
Industrial Lancashire 1600-iy8o ( 1 9 3 1 ) , p . 5 0 6 .
a fairly large number of individuals. Some of it was already in
existence. Looms which had never clacked for more than a day
a week found material for more or less continuous operation
when the jennies got to work.
Moreover the final product was not so new that it had to
create its own demand through changing tastes. Indian calicoes
and muslins had long been in active demand in the markets
served by British merchants, including Britain itself, where
unsuccessful attempts had been made to exclude the Indian
article. When a commodity as good—in time it was better—was
produced by British manufacturers it found a market ready-
made. As its price fell so as to bring it within the reach of the
poorest people, and its quality improved so as to enable it to
compete with other textiles like linen and silk the market
widened to mass proportions. This gave it a momentum which
few other industries could have attained. The basis of Professor
Rostow's argument that cotton was a leading sector in the
British industrial revolution, for example, lies in its relatively
massive impact on the national economy, and in the secondary
repercussions which such a massive impact could produce on
related sectors.' Industrial enterprise on this scale had secondary
reactions on the development of urban areas, the demand for
coal, iron and machinery, the demand for working capital and
ultimately the demand for cheap transport, which powerfully
stimulated industrial development in other directions.'1
Another characteristic of the eighteenth-century cotton in-
dustry which may have helped it to respond as rapidly as it did
to the opportunities offered by the new inventions was the fact
that it was highly localized. It is not entirely clear why it should
have been so concentrated in Lancashire, though a number
of reasons can be advanced which might have contributed
significantly to this result. The tendency towards concentration
can be traced back to the first half of the century, and the
traditional explanation is that geographical conditions were
peculiarly favourable to a Lancashire home for the cotton
industry—its damp climate, for example, and its lime-free water
are said to have assisted the spinning and cleaning processes.
It may have been important that labour was relatively abun-
dant, and therefore cheap; the evidence on baptism, births and
marriages points to an upward movement in the curve of
1
population growth in the north-west before this appeared in
Britain as a whole. No doubt the expansion of the port of
Liverpool, a point in the triangular trade in cottons to West
Africa, slaves to the West Indies and the southern States of
America and raw cotton back to Britain, helped to encourage
the cotton manufacture in Lancashire. The fact that this was
also a flax-producing and -spinning region in the early eight-
eenth century was another reason for siting the cotton industry
in its vicinity at a time when linen yarn was required to provide
the cotton warp.
It is unlikely that any one of these reasons was strong enough
to determine the increasing concentration of the eighteenth-
century cotton industry. But taken together they may explain
it. Later in the century, when the water-frame produced a
demand for power, the fast-running streams of Lancashire, and
later still the coalfields, reinforced these tendencies. But,
whatever the reasons, the concentration of the industry helped
to increase the economies of scale and to accelerate the progress
of innovation. In a country as little integrated as eighteenth-
century England it often took many decades for an innovation
to spread from one end of the country to another. Within one
county the force of successful example was more easily
manifested and the jennies appeared rapidly in one cottage after
another.
Finally, of course, in looking for an explanation for the
sustained character of expansion in the cotton industry and the
strength of its impact on the national economy, it must be
remembered that Britain was first in the field with the new
machines and with the cheaper, finer cottons and that she was
therefore able to reap the innovator's profits. By the time her
rivals had followed her lead and were turning out comparable
products, prices had fallen to more competitive levels and the
boom profits had been won. The initial lead was particularly
important for an industry producing for a mass market and
operating under conditions of increasing returns. For it meant
that the country which was first in building up the capacity and
the ancillary industries and the commercial contacts could go
on getting higher-than-average profits for a considerable time,
simply because it was enjoying larger economies of scale and
could go on supplying its products at keener prices.
In retrospect, the progress of the cotton industry looks
spectacularly rapid: and so it did to contemporaries. By the end
of the eighteenth century an industry which contributed less
than half a million pounds to national income in the early 1760's
and exported goods worth probably no more than a quarter of
a million pounds overall was adding over £ 5 millions to
national income and a similar amount to the declared value of
exports. The speed with which the imports of raw material
multiplied is staggering—from under 10 million pounds per
annum in the early 1780's to ten times as much in the period
of Waterloo and fifty times as much in the early 1840's.
Yet in some ways the transformation of the industry was quite
gradual, and it was partly this that permitted the expansion in
output to be strongly sustained through wars and depressions.
To begin with, expansion was achieved by taking up the slack
in existing under-employed resources rather than by diverting
resources from other uses. The jenny multiplied the productivity
of labour in the spinning branch and enabled weavers to work
regularly at their looms. The water-frame and the mule were
more than mere labour-saving devices; they were substitutes for
human skill, for they permitted the production of stronger, finer
yarn by relatively unskilled labour. They were the beginning
of a new era in economic organization, for they required a docile
labour force working in the disciplined atmosphere of the
factory.
The factories, however, provided only part of the immense
increase in output that put cotton at the head of the British
manufacturing industry. Most of it was produced by a multitude
of outworkers—the domestic spinners to whom the capitalist
mill-owner served out raw cotton, and the hand-loom weaver
whom he supplied with the appropriate yarn. When trade was
bad it could be largely concentrated in the factories and it was
the domestic spinners and weavers who took the full brunt of
depression. When trade was good it was generally possible to
attract new spinners and hand-loom weavers without having
to raise the level of wages, for there remained a dearth of
alternative avenues of employment; so that the capitalist
employer reaped the main benefit of the boom, and escaped the
worst effects of the slump. Having a minimum of overheads to
carry on his own costs he still had a virtually inexhaustible
reservoir of surplus labour and machine capacity to draw upon
at will.
The persistence of the domestic cotton industry is thus not

altogether surprising. On the one hand there was the natural
and dogged resistance of the independent head of household to
being dragooned into factory employment. The hand-loom
weavers paid heavily for their independence, but they held out
in force until the 1830's. On the other hand, there was the
capitalist employer's reluctance to sink his capital into buildings
and plant that might reduce his profits in depression when he
could meet the boom demand by turning to outworkers. These
two factors delayed the general adoption of the power-loom for
three to four decades after it was effectively available. 'So
eminent a factory owner as John Kennedy was still doubtful in
1815 whether the saving of labour by the power loom counter-
balanced the expense of power and machinery and the
disadvantage of being obliged to keep an establishment of power
looms constantly at work.M It was not until the early 1840's that
the number of power-loom weavers exceeded the number of
hand-loom weavers and not until the 1850's that the latter were
effectively extinguished.
Throughout the period of mechanization of the cotton
industry, which could be said to have been virtually complete
by 1850, the capitalist manufacturer was in a very strong
position. He could shift the main burden of adjustment to
technical change to the domestic producers who owned the
hand-looms which were being rendered obsolete. He could
readily contract or expand the working time of a large unor-
ganized labour force composed mainly of women and children
or young persons, for it was not until the 1850's that maximum-
hours legislation became effective. In 1835 not many more than
a quarter of the operators in cotton factories were men over the
age of eighteen; 48 per cent were women and girls and 13 per
cent were children under fourteen. There was not much
competition for this unskilled semi-dependent labour force until
the industrial revolution gathered momentum in other indus-
tries and provided additional openings for women and children
in light industry. At the same time the cotton manufacturer was
producing a commodity with a mass market at a price which
sheltered it from competition until technical change had had
time to spread to other textile industries and other countries.
There is no doubt that the sustained progress of the cotton
1
Wadsworth and Mann, The Cotton Trade, p. 405.
industry in the period 1780-1850 and its leading role in the
industrial revolution owed much to the favoured position in
which its capitalist manufacturers found themselves. For the
British industrial revolution was a spontaneous industrial revo-
lution, not a forced industrialization as some of its successors
have been. Its development depended on the unfettered response
of private enterprise to economic opportunity.
A great deal of stress has been put on the role of the textile
inventions in stimulating the industrial revolution and hence,
understandably, on the leading role of the cotton industry. It
is important, however, not to overstate their importance. For
it is arguable that the fact that the cotton industry led the way
at this period was due more to the drive of its entrepreneurs than
to the skill of its inventors.
In examining the process of economic growth through tech-
nological change it is convenient to distinguish, as Schumpeter
has done, between invention and innovation, for it is the latter
which is revolutionary in its economic effects, not the former.
Invention is the basic original discovery, the crucial break-
through in the realm of either theoretical or practical knowledge
which makes a change in productive methods possible. Inno-
vation is the application of this new knowledge or the use of the
new machine in practical economic activity. Thus invention can
be and often is a purely external factor to the economic
situation: of itself it has no economically relevant effects and it
does not necessarily induce innovation. A new machine or a new
technique may be known to its original inventor and accessible
to producers for years or decades before it is put into practice.
Innovation, on the other hand, is the heart and core of
technological progress. It is this that enlarges the possibilities
of production, requires new combinations of factors of produc-
tion, and creates new cost structures. Not all innovations are
the product of what we should classify as invention, traceable
to some identifiable conquest in the realm of theoretical or
practical knowledge made in the immediate or remote past. On
the other hand an invention—the steam-engine, for example
—may give rise to a variety of innovations. Indeed the essence
of Schumpeter's theory of innovation is that innovations tend
to occur not in a steady stream, but in a series of bunches
emanating from some specially fruitful invention, and hence
that growth tends to take place not steadily but in waves. In
any case, whether we subscribe to the theory of 'bunched

innovations' or not, it is evident that what we want to focus on
in tracing the course of economic change is not the initial
inventions or new knowledge which made it possible, but on the
response of businessmen which made it real, that is, on what
is sometimes called the ' technological dynamism' of the econ-
omy's entrepreneurs.
The reward for innovation in a private enterprise economy
is profit. The first entrepreneur to carry an innovation into effect
sells a commodity at the old price but at a lower cost and takes
the whole of the difference as profit. He becomes that much
richer than his rivals. His example, or rather the size of his profit,
encourages imitation and, as the number of his imitators
increases, two factors tend to narrow the gap between price and
cost: (1) competition between producers to invade existing
markets, which tends to diminish price, and (2) competition for
existing factors of production which are in inelastic supply. If
the gap narrows too quickly the rate of innovation falls off
smartly both because entrepreneurs have less incentive to
change their methods and because they have smaller profits
with which to finance new kinds of capital equipment.
The interesting thing about the cotton industry at this period
is that although prices fell steeply—between 1815 and 1845 f° r
example, the prices of cotton cloth exports fell by about
three-quarters—profits were well maintained. In part of course
this was because producers continued to innovate, though
perhaps not as fast as they could have done. I have already
referred to the slowness with which the weaving section turned
over to steam-power and ' there were still plenty of wooden
spinning jennies, turned by hand in the Lancashire mills in
1824 V However, a series of innovations in related industries
helped to reduce costs in the first quarter of the nineteenth
century: improvements in cotton-ginning machinery reduced
the price of raw cotton; specialization on the part of textile-
machinery firms produced better and cheaper machines; mech-
anization in the bleaching, dyeing and printing trades reduced
processing costs; the introduction of gas-lighting made it possible
to reduce the weight of overhead costs by operating plant and
machinery day and night through a multiple shift system; and
1
Clapham, Economic History, vol. I, p. 86.
IOO THE FIRST INDUSTRIAL REVOLUTION
improvements in road and canal communications reduced

distribution costs.
But possibly the most important reason for the cotton indus-
try's ability to maintain its profits and hence its rate of
investment was the fact that it enjoyed an almost inexhaustible
low-priced labour supply. While women and girls and pauper
children could be put to work for 12 to 16 hours a day in
cotton-mills at bare subsistence wages and while there remained
a 'reserve army' of domestic handloom weavers prepared to
work longer and longer hours for a smaller and smaller return,
the cotton industry could nearly always command as much
labour as the demand for its products warranted and wages
stayed low. Between about 1820 and 1845 t n e industry's total
output roughly quadrupled but the wages of its operatives
barely rose at all.
In this surely lies one of the most important reasons for the
powerfully sustained growth of the cotton industry over the
period 1780-1850. An increasing proportion of the incomes that
it generated went to the entrepreneurs, and they in their turn
were ready to plough back a substantial proportion of earnings
into more plant and machinery. This high rate of plough-back
meant two things: (1) that the industry went on expanding its
capacity to produce and increasing its economies of scale (i.e.
the kind of internal economies that accrue to concerns that can
produce on a scale large enough to minimize the cost of their
overheads in each individual unit of product, and the kind of
external economies that arise from the development of specia-
lized ancillary industries in merchanting, bleaching, dyeing,
etc); (2) that the industry went on improving its equipment
even though radical changes in technique were not as rapid as
they could have been, given the accessible range of inventions;
the fact is that even where technical change is unspectacular it
tends to be continuous wherever there is a high rate of
investment, for new machines tend to be better than their
predecessors, even if they are not substantially different from
them, so that a high rate of investment, which involves a high
rate of introduction of new machines, generates a continuous
flow of these minor improvements.
When the supply of labour became somewhat less elastic in
the late 1840's and after, the industry's rate of growth slackened.
The reasons for the tightening up of the labour supply were
THE COTTON INDUSTRY IOI
several. First of all there was the fact that certain pockets of
technological unemployment—the hand-loom weavers consti-
tute the classic case—were liquidated by depression and sheer
starvation. Secondly, the social conscience was beginning to
revolt against the callous exploitation of child and female labour
and the shorter-hours legislation was gradually beginning to
take effect. Thirdly, other industries were beginning to compete
for labour, particularly when the railroad boom developed and
stimulated trade and industry in general, and when the other
textile trades began seriously to mechanize. These factors
slowed the rate of expansion of the industry but accelerated the
growth of incomes from employment in the industry. Between
1845 and 1870, for example, the cotton industry's output
roughly doubled, that is to say it grew at about half the pace
of the preceding 25 years, but the workers' share in the incomes
which it generated grew a little faster than the total. By this time
cotton had no claim to be the leading sector in the industrial
revolution or to be setting the pace for national economic
growth.
To sum up, then, it is not difficult to see why and how the
cotton industry grew from insignificance to principal manu-
facture within little more than a generation and became the first
British industry to adopt labour-saving power-driven machinery
on a large scale and to produce for an international market.
There is no doubt that its spectacular success inspired the
imagination of contemporaries and set an example which may
well have been an important factor in encouraging technical
change in other industries. The demonstration effect was clearly
influential in other textile industries. The new spinning tech-
niques, for example, were relatively readily adaptable for
worsted and linen mills. The power loom was applicable in
principle to woollen and linen weaving. Technological change
in the primary processes—carding, spinning and weaving—
stimulated output and innovation in the finishing trades. The
multi-storeyed cotton spinning mills were the first factories to
introduce the new building technique of iron-framed
construction,1 and the first to adopt gas-lighting with the
round-the-clock working schedule that this permitted. It was
not chance that put the first modern railway service, regularly
1
T. Bannister, 'The First Iron-framed Buildings', Architectural Review (1950).
IO2 THE FIRST INDUSTRIAL REVOLUTION
moving both goods and passengers, between Liverpool and

Manchester.
It is possible, nevertheless, to exaggerate the strategic role of
the cotton industry in stimulating and pushing forward the
broader process of industrial change and growth. The principal
raw material was entirely imported so that the crucial links in
this direction were with non-British rather than with British
industries. It was a long time before cotton manufacture became
a major consumer of coal. The industry was highly localized so
that it did not create a spreading demand for new transport and
building facilities. It was not until the second quarter of the
nineteenth century that a textile-machinery industry developed
on any scale. In short, the industry's links with other major
producing sectors were quite limited and its repercussions on the
rest of the economy were largely indirect. How significant these
indirect effects were in precipitating and sustaining the overall
process of industrialization must remain a matter of judgment
rather than measurement. What is clear is that the transform-
ation of the cotton industry was an important part of the
industrial revolution. In order to complete the picture, however,
we need to examine the changes taking place in other industries
which were independently transformed over the period
i780-1850.
CHAPTER 7
THE IRON INDUSTRY
The other British industry whose technology was revolutionized

in the last quarter of the eighteenth century was the iron
industry. As with cotton, the effect of the technological trans-
formation was to satisfy a long-established need with the
production of a commodity which was so different, both in
quality and in price, from what had hitherto been produced in
Britain that it was virtually a new commodity.
In certain other respects the changes in the iron industry's
system of production which were involved in the industrial
revolution were less radical than the changes in the cotton
industry. The textile industries were transformed in organiza-
tion as well as in technology. There the domestic-handicraft
type of manufacture gradually changed into a capitalistic
factory industry. But the iron industry was already capitalist-
ically organized. Its development in the sixteenth century was
one of the outstanding examples of technological and organi-
zational change which Professor Nef adduced to support his
argument that the origins of the industrial revolution lie in the
period 1540-1640.l Professor Ashton makes the point forcibly
in his study of the iron industry in the Industrial Revolution:
From the earliest period of which we have exact information,
iron-making in this country has been conducted on capitalistic
lines—capitalistic not only in that the workers are dependent upon
an employer for their raw material and market, but also in that they
are brought together in a 'works', are paid wages and perform their
duties under conditions not dissimilar to those of any large industry
of modern times. The scale of operations has increased enormously:
the sapling has become an oak, deep-rooted and widespread; technique
has been revolutionized. But in structure and organization there is no
fundamental change.2
1
J. G. Nef, in Carus-Wilson, Essays in Economic History, vol. i. See especially p. 95.
2
T. S. Ashton, Iron and Steel in the Industrial Revolution, (1924) p. 1.
IO3
Another feature of the industrial revolution in iron and steel
which distinguishes it from that of the cotton industry is that
the former expanded on the strength of domestic raw materials.
The eighteenth-century innovations enabled British industries
to turn from charcoal (a dwindling resource) to coal (which was
abundantly available) and from imported to native iron.
Whereas the cotton industry achieved its spectacular economies
largely by saving labour, the iron industry did so by econo-
mizing in raw materials, that is by using materials that were
abundant and cheap in place of materials that were scarce and
dear. It has been estimated that a big eighteenth-century blast
furnace could work for ever with about 7,000 acres of woodland
at its disposal,1 but growth in population and urbanization, the
pressure for more farmland and the rising demand for woodfuel
by both domestic and industrial consumers were pressing hard
on the limited British woodlands by the middle decades of the
century. Abraham Darby had successfully smelted iron with
coke as early as 1709. In a sense this was the beginning of the
end of the charcoal iron industry. But recent research on the
furnace accounts of some of the ironmasters indicates that it was
not until the 1750's that the rising price of charcoal and the
falling price of coal (associated with steadily increasing efficiency
in its use) combined to turn the balance of advantage decisively
in favour of coke-smelting.2 Later innovations in the refineries
completed the move from wood to coal as the staple fuel of the
iron industry.
Once the switch from wood to coal was complete the effective
constraint on an ironmaster's expansion of his output depended
not so much on his access to fuel resources as on his power
supply. Coke was a slow-burning fuel compared with charcoal
and needed power to secure an adequate blast. Water power
could be used, of course, but was subject to seasonal variation
and was also limited in supply at any particular location. It was
when Boulton and Watt's steam engine was introduced around
1775 that the iron-masters were freed from the restrictions on
location and size of plant characteristic of the wood and water
level of technology, and were able to move into areas rich in
coal and high-class iron resources and began to reap the
1
G. Hammersley, 'The Charcoal Iron Industry and its Fuel', Economic History Review
(!973)> P- 6 o 6
2
Charles K. Hyde, Technological Change in the British Iron Industry, ijoo-i8yo (1977).
THE IRON INDUSTRY IO5
economies of scale of modern industry. A third distinguishing

characteristic of the industrial revolution in iron then is that its
final breakthrough seems to have depended at least as much on
an invention that was external to the industry as on the
innovations in ironmaking.
Finally there was a fourth reason why we might expect the
iron industry to have played a very different role from that play-
ed by cotton in the British industrial revolution. This is the fact
that iron was primarily a producer's good, subject to a derived
rather than a direct demand and, partly in consequence, was
subject to an inelastic demand. The expansion of a producers'
good industry depends on economic conditions in general or on
the growth of industries which consume its products. In some
ways the iron industry was able to widen its market when its
price dropped, to create new demands by replacing other
products—iron began to be used widely in construction work
(bridges, and building for example), in the last quarter of the
eighteenth century, and in 1784 the plant of a London flour-mill
was built largely of cast-iron. But until towards the middle of
the nineteenth century when the demand for iron to construct
railroads, locomotives, ships, machinery, gas and sanitation
systems greatly expanded the range of its outlets, the industry's
expansion was severely limited by factors on the side of demand.
So that although the changes in its production function were
radical enough and its price fell steeply, demand was too
inelastic to permit a corresponding rise in the amount sold. There
had to be some progress in industrialization before the iron
industry could develop and sustain an accelerating momentum
comparable to that of the cotton industry.
These characteristics of the iron industry in the last quarter
of the eighteenth century—its traditions of capitalistic large-
scale organization, its new demand for domestically produced
raw materials, its dependence on the steam-engine, and its
inelastic demand—rendered the role it played in the British
industrial revolution very different from that of cotton. Whether
it was less or more important in this respect is a matter of
legitimate doubt. Professor Rostow, who gave cotton the role
of leading sector in his model of the British take-off, apparently
considered iron less important, but this view seems to be largely
a consequence of the rather rigid frame of thought imposed by
his 'stages of growth' analysis. If it is necessary to think of the
Industrial Revolution, as Rostow did, in terms of a specific

period of two to three decades within which the crucial changes
in methods of production had decisive consequences, then the fact
that he ascribed the British industrial revolution to the period
following 1783 and the fact that the cotton industry did (and
the iron industry did not) reach a relatively massive proportion
within the British economy in that period, lead inevitably to the
conclusion that cotton must have been the leading sector. If, on
the other hand, we regard the Industrial Revolution as having
effectively evolved over a longer and less rigidly defined span
of years—roughly within the period 1770-1850—and judge an
industry's importance in the process by the weight and range
of its repercussions on the rest of the economy, then the iron
industry's claim to have played the key role is quite impressive.1
Here surely in its forward and backward linkages with the rest
of the economy—in the demand for coal and iron and extensive
transport and capital facilities on the one hand, and in the
reduction of costs for a wide range of manufactured goods as
well as in the building and transport industries on the other—we
can see the iron industry playing a more powerful and pervasive
role in the process of British industrialization than did cotton.
But it is not really necessary, or even useful, to persist in the
attempt to identify a single industry to which can be ascribed
the leading part in precipitating the British industrial revolution.
A more satisfying and convincing, if less dramatic, case can be
made for the view that the first industrialization was the result
of a cluster of innovations in Schumpeter's sense of the term.
Some of the relevant inventions belong to an earlier period: but
it is the innovations, the general adoption of the inventions, that
counts. This cluster of innovations was decisive for three main
reasons: (1) because they occurred at roughly the same period
of time, (2) because they came when Britain's naval supremacy
and commercial contacts enabled her to take advantage of rising
European and North American incomes, and (3) because they
reinforced each other in certain important respects. The con-
centration of the cluster was all-important. It made the process
of industrialization a great deal more profitable than it would
otherwise have been, and gave the British economy a lead over
its rivals which ensured that the process would go on being
profitable so long as the lead was maintained.
1
See W. W. Rostow, The World Economy, p. 383, for a less rigid periodization of British
stages of growth than that suggested in his earlier writings.
THE IRON INDUSTRY IO7
With this kind of interpretation of the industrial revolution
in mind, let us try to assess the part played by the iron industry
in the first industrial revolution. Let us ask ourselves first what
was the character of the technological changes which
transformed the industry—-and when did they occur? And
secondly what kind of impact did they have on the national
economy as a whole? To begin, then, consider the process of
technological change in the eighteenth-century iron industry.
What kind of industry was it at the pre-industrial stage?
The evidence suggests that the English iron industry in the first
half of the eighteenth century was scattered, migratory, and
tightly constrained by its resource limitations. It has been
estimated that the peak output of the English charcoal industry
was achieved between 1625 and 1635 when the output of pig-iron
probably reached 26,000 tons per annum. By the 1720's it is
estimated that the pig-iron output was between 20,000 and
25,000 tons per annum and most of this went to produce cast-iron
objects. Most of the wrought-iron and steel produced in this
country was made from imported bar-iron, largely Swedish.
The reason for the industry's stagnation was that it faced
acute raw-material problems. On the one hand its native
iron-ore resources were very low grade—full of impurities which
made it difficult to evolve a tough, hard, final product. On the
other its main fuel, charcoal, was a dwindling resource which
was so fragile that it was virtually non-transportable. This of
course is what made the industry scattered and migratory. The
first requirement of a successful iron-works in the early
eighteenth century was that it should be situated in a large area
of woodland. Nowadays the iron and steel industry is
characteristically the hub of a dense complex of industry and
population. The charcoal-fired blast-furnace was generally
found in a remote area, isolated from other industries and from
other furnaces, and there were furnaces scattered all over the
country from the Scottish Highlands to the Weald of Kent,
wherever there was a sufficiently large woodland to supply their
voracious needs for charcoal.
The industry was vital to the economy, even in pre-industrial
times, and much thought and effort was put into trying to
overcome the obstacles to its expansion. There was a close
association between land-holding and iron-making, and the
iron-masters were relatively wealthy men who had the financial
resources and the incentive to experiment with new methods.
The first patent for the use of coal in iron-making was granted
in 1589 and a series of similar patents were taken out in the late
sixteenth and seventeenth centuries. None of them seems to have
resulted in a commercially viable product until 1709 when there
is evidence that Abraham Darby's works at Coalbrookdale
actually did smelt iron with coke, but until the 1750's the only
blast furnaces dependent on coke were operated by the Darby
family. Various reasons have been advanced for this long
technological lag, of which the most convincing is the fact that
there was a quality difference between charcoal pig and coke pig
which significantly raised the costs of converting the latter into
acceptable bar iron.1 The Darbys found it profitable to use coke
because the bulk of their output went to cast iron rather than
wrought iron products, and also because they had developed
a technique of making thin-walled castings for which coke pig
was actually a superior material. This was the technique which
Darby patented in 1707 and which 'remained a well-guarded
industrial technique long after the expiration of his patent'. 2
Meanwhile Benjamin Huntsman achieved a similar kind of
success in steel-making, by perfecting in the 1740's a process
which used coke to generate an intense heat and so to produce
a cast-steel that was relatively free from impurities.
Neither of these innovations, however, solved the basic
problems of the forging branch of the iron industry, the branch
which produced bars intended for wrought-iron or steel. Ben-
jamin Huntsman had to use Swedish iron for his steel-making
because English pig was too brittle. Wrought-iron still required
a charcoal fire. The coke furnace somewhat eased the problem
by making cast-iron an acceptable substitute for wrought-iron
in many products. The new cast-iron products of the coking
furnaces could be used for a variety of household utensils: for
gates, gun-carriages, cannons, cheap nails, joists, pipes and
bridges. Because cast-iron is less costly to produce than wrought-
iron, these products were cheaper and displaced the wrought-
iron versions. But for plough-shares, hoes, tools of all kinds, locks
and bolts and stirrup bits the coke furnaces would not produce
an acceptable product: and for the better articles of this kind
and for cutlery and all steel goods the British ores were
unsatisfactory, even when processed by charcoal furnaces.
1
See Charles K. Hyde, op. cit., pp. 26-8 for a discussion of the nature of the quality
2
difference. Ibid., p. 41.
THE IRON INDUSTRY
Through most of the eighteenth century the search for

charcoal supplies went on and reached out into the wooded
areas of Scotland. A furnace was built at Inveraray as late as
1775. Clearly an industry with a product as heavy as iron could
achieve little in the way of economies of operation if it had to
set up its workshops so far from the consuming centres. Except
where there was navigable water, transport costs were prohib-
itive in the eighteenth century. ' I t has been estimated that the
cost of inland transportation for 20 miles was about equal to the
cost of freight from the Baltic.'1 British charcoal iron-making
was thus a high-cost industry in the eighteenth century. Swedish
iron was not only better but cheaper in many areas, even though
it had to run the gauntlet of both a £ 3 export duty and a £2
import duty on its way to the British market.
It has been said that the turning point in the history of the
iron industry came in 1775, when Watt's steam-engine made
it possible to apply increased power for blowing the blast
furnace and mechanical power for forging. There is no doubt
of the immense and immediate importance of the steam-engine
to the iron industry. The first steam-engine to be applied for
purposes other than pumping water was installed at the factory
ofJohn Wilkinson the iron-master, but the switch from charcoal
to coke in the blast furnaces was already well underway by the
1760's. In 1760 the Carron iron-works coke blast-furnace was
opened and was powered by a steam blowing-engine; the
standard method of blowing till then had been by waterwheel-
driven bellows. In 1760 there were only 14 coke furnaces in blast
in Britain, but the number doubled in the 1760's and early
1770's. Meanwhile investment in the charcoal iron-industry
had come to a standstill: there is no evidence of a charcoal
furnace being built after 1775, and by 1790 the number in use
had fallen to 25, whereas the number of coke furnaces had risen
to 86. With the development of steam-driven blast in the late
eighteenth century the iron industry lost its migratory character
and began to concentrate in large-scale units of production
grouped in regions where coal and iron were in ample supply
and where water-borne transport was available. By 1806 87 per
cent of the pig-iron production of the country was located on
the coalfields. With up to 10 tons of coal required to produce
1
H. Roepke,' Movements of the British Iron and Steel Industry i 720 1851 \ in Illinois
Studies in the Social Sciences, volume 36, p. 38.
IIO THE FIRST INDUSTRIAL REVOLUTION
i ton of pig iron in the 1760's and 1770's it is understandable
that the coalfields should have been the main attraction.
The main disadvantage of using coal in the forge, that is in
the refining process whereby pig-iron was converted into
bar-iron, was that coal introduced impurities which made the
bar-iron brittle and the final product unreliable. Using coke
pig-iron added further impurity. These technical problems
inhibited the output of British forges through most of the
eighteenth century and the evidence suggests that the first
commercially viable technique designed to eliminate both sorts
of impurity was the potting process patented by the Wood
brothers in 1761 and adopted widely—after a period of expe-
riment and modification—from the late 1770's.1 This early
break-through has, however, been overshadowed in the litera-
ture by the technique which was to supplant it from the mid
1790's—Cort's puddling and rolling process patented in 1783
and 1784.
There were three features of Cort's method that made it an
important advance: (1) it used coal fuel throughout and so
escaped the dependence on charcoal which made British bar-
iron such a costly product, (2) it converted native pig-iron to
bars which were at least as good as the Swedish product, and
(3) it made a single process of a series of operations—puddling
(i.e. melting and stirring), hammering and rolling—which had
hitherto been disconnected. Successful application of a complex
discovery of this kind was not automatic. It required capitalists
with the capital to spare and the inclination to risk it on
innovation, experienced managers and foremen to design the
production process and introduce the minor modifications and
improvements that were needed to put the finishing touches on
its efficiency, and skilled workmen to build the equipment and
put the plans into execution. Such factors of production were
scarce in eighteenth-century Britain as they must be in all
pre-industrial economies. In the beginning progress came where
these factors were available. Most of the immediate expansion
in iron-making that followed in the decade after Cort took out
his patent occurred in South Wales, where Richard Crawshay
had been quick to introduce the process. As late as 1791 the
Carron Company, a large and progressive concern, had tried
1
Hyde, op. cit., p. 194.
THE IRON INDUSTRY III
Cort's method and—to quote from a letter in the Company's
records—found that it 'made iron far from being bad, but
the extraordinary waste rendered it a very losing process'.1
Moreover it took some time for consumers at home and abroad
to realize that British iron, so long an unreliable product, could
be as satisfactory as foreign iron.
Nevertheless, like Arkwright's water-frame, Cort's discovery
was actually adopted more rapidly than most successful
eighteenth-century inventions, partly because the inventor was
unlucky enough to lose his patent rights prematurely. Cort was
ruined by the bankruptcy and suicide of one of his main
creditors and was unable to protect his patent, which lapsed in
1789. From then on the iron-masters could experiment with his
process as they chose, introducing whatever improvements
occurred to them, without costs in the way of royalties. In the
1790's and the first decade of the nineteenth century the
industry expanded on all fronts. The possibility of using British
pig-iron for wrought as well as cast iron products greatly
expanded the demand for pig. Between 1788 and 1805 output
of British pig-iron almost quadrupled: it had already doubled
in the previous wave of expansion which resulted from the wider
use of coke in blast-furnaces dating from the 1760's. By 1812,
although Swedish bar-iron was still being imported for the
steel-makers, Britain was exporting more bar-iron than she was
importing.
By the first decade of the nineteenth century, then, the output
of British pig-iron was running at over a quarter of a million
tons per annum compared with perhaps 30,000 tons in 1760.
Over 60,000 tons per annum were being exported. Taken
broadly—from the iron mines to the final product, that is to
say—the iron industry may have generated something like 6 per
cent of the British national income in the first decade of the
nineteenth century, compared with perhaps 1 or 2 per cent in
the 1760's. Its expansion in the fourth quarter of the eighteenth
century owed much to the steam-engine, not only through the
use of steam-power in its own furnaces, hammers and mills but
also through the cheaper, better coal and ore which steam
pumping-machines in the mines made accessible.
The main consequence of the innovations in the iron industry
1
R. H . Campbell, Canon Company (1961), p. 60.
in the second half of the eighteenth century was to effect

spectacular economies in its raw-material costs. But the basic
innovations stimulated others which resulted in important
savings in time and labour. A steam-hammer introduced by
John Wilkinson in 1782 could strike 150 blows a minute. Cort's
rolling mill when powered by steam could process 15 tons of iron
in the time originally required to turn out 1 ton of bar-iron by
the standard hammering process. By the first decade of the
nineteenth century it was estimated that English puddled
bar-iron was selling at prices varying from £20 to £28 per ton,
whereas the rival Swedish product varied from £35 to £40 a
ton. Cheaper supplies of pig and bar iron stimulated innovation
in further processes. In the 1780's and 1790's new machines were
introduced for a variety of intermediate stages: machines for
drawing, cutting and working the metal, for example, drills for
boring cannon, metal turning lathes, and machines for forging
nails or turning screws.
The result of this cluster of innovations was to change
completely the structure and character of the industry. Between
1788 and 1805 the average make per blast-furnace grew from
750 tons to 1491 tons, an increase of 99 per cent in less than
two decades;1 by 1839 it was 3,566 tons. The iron-founders had
always been relatively wealthy men—they had to be in an
industry which required such heavy capital outlays as were
involved, for example in the construction of a blast furnace, but
the iron-masters of the last quarter of the eighteenth century
operated on a scale which was beyond all previous experience.
John Wilkinson's industrial empire included collieries, tin
mines, iron foundries, forges, warehouses, and landing-stages;
it extended over Wales, Cornwall, the Midlands, London and
France; he even coined his own money. Moreover when Cort's
process enabled the forging sector of the industry to go over to
coal, it finally removed the barriers to integration of the iron
industry. It was this that facilitated its concentration and
permitted it to grow into the industrial giant that it character-
istically is today. ' In Staffordshire, Yorkshire and—above
all—South Wales, all processes from the mining of coal and ore
to the slitting of rods and the production offinishedwares were
henceforth carried on in the same locality, by the same firm,
1
Hyde, op. cit., p. 113.
THE IRON INDUSTRY I 13
1
and most of them in single establishments.' This resulted in
enormous operational economies and by producing good cheap
iron of uniform texture and reliability provided the British
economy with the raw material of a new industry—mechanical
engineering.
In effect, the innovations which began to spread through the
iron industry in the last three to four decades of the eighteenth
century determined the character of technical change in the
industry until the 1860's, when Bessemer demonstrated his new
steel-making process and Cowper's regenerative stove was
perfected. The only major discovery affecting the industry in
the first half of the nineteenth century was Nielsen's discovery
in 1828 that heating the air used in the blast resulted in much
lower coke consumption and greatly increased output. Within
less than a decade the use of hot blast had been adopted
generally. This innovation brought with it a number of advan-
tages: it permitted considerable economies in the use of fuel, it
facilitated the use of larger furnaces, it gave economic value to
the Scottish black-band ironstone which had been almost
unusable for iron smelting until the hot blast was used, and it
enabled those regions of Scotland and South Wales which were
without good coking coal to use raw coal. After the introduction
of the hot blast, Scotland produced pig-iron at the lowest cost
in Britain and probably in the world.
But if there was no new major development apart from hot
blast in the first half of the nineteenth century, technical
progress in the iron industry did not come to a standstill. There
were three related trends, (i) There was a steady increase in
the size of the unit of production. (2) There were continuing
economies in the amount of coal consumed: by 1840 the weight
of coke used in making pig-iron was no greater than the weight
of iron ore required; in 1788 the ratio had been 7 tons of coal
to one of pig, in 1810 5 tons and in 1840 3^- tons. (3) There were
continuing improvements in the design of plant and machinery:
there were changes in the design of the blast-furnace in the
1830's, for example, which raised the height of the furnaces and
saved fuel and accelerated the output of metal; there were
improvements in the puddling process which reduced the
pig-iron required to make a long bar from 30 or 35 hundred-
1
weight at the beginning of the century to 26 or 2 7 hundredweight

in the 1840's; there were improvements in the steam-hammer
and in the rolling mill which saved time and labour.
Actually, after the breakthrough of the 1780's which quad-
rupled output in less than a couple of decades, the iron industry
grew very much more slowly. The expansion of the 1790's and
the 1800's was associated with the abnormal wartime demand
for iron products inflated by naval and military needs and it
was assisted by the improvement in transport facilities created
by the canal mania. When the war ended there was a pro-
nounced depression, and growth was not resumed until the
military demand was replaced by demand for a variety of other
purposes. Iron began to be used in increasing quantities in
constructing buildings, bridges, machinery, canal boats, gas
and water pipes, lamp-posts, railways, and pillars; 'London
even made experiments with iron paving—near Blackfriars
Bridge and Leicester Square'. 1 It was not until the railway age,
however, beginning in the 1830's, that the industry resumed the
rate of growth which had characterized it over the period
between the 1780's and the 1800's. Yet, if output grew more
slowly in the period after the Napoleonic wars than before, it
grew faster than in any other country. Britain's share of the
world output of pig-iron grew from 19 per cent in 1800 to 40
per cent in 1820 and to 52 per cent in 1840. What can we say
then about the impact of the iron industry's progress on the
British economy as a whole? Consider, for example, the linkages
on the demand side—the 'backward linkages' with the rest of
the economy in Professor Rostow's terminology.
First of all the iron industry created a demand for British
iron-ore resources: and the significant point here was that it
gave a value to mineral resources which had hitherto been so
low grade that they were practically worthless. It was one of
Britain's special advantages as a location for the first industrial
revolution that her iron and coal resources co-existed in the
same regions, often within the same mines. The ore that was
used at this time was almost entirely from beds within the coal
measures: indeed in 1850 it was estimated that 95 per cent of
the iron ore used was coal measures' ore.2 For more than a
century following the rapid development of coke smelting in the
1
2
Roepke, 'Movements of the British Iron and Steel Industry', p. 27.
industry (dating from about 1760) it relied almost exclusively
on domestic sources of iron ore, although these were of relatively
low quality. It was not until the 1870's and the 1880's that
imports of iron ore became significant.
In addition to iron ore the industry used large quantities of
British limestone and British coal. The iron industry was the
most important single factor in the rising demand for coal in
the first half of the nineteenth century, and through its demand
for both coal and ore it created an associated demand for
transport facilities. The canals, as we have seen, were built
primarily to ship coal, and a sizeable proportion of this—
probably about a fifth in the early nineteenth century and
about a quarter by 1840—was required to meet the needs of
furnace and forge.
Finally, it may be said that if a modern industry is a large-scale,
heavily capitalized and mechanized factory industry, the iron
industry was its prototype and it demanded the factors of
production appropriate to a modern industry. It needed steam-
power (though water-power was often made to serve in the
earlier years) for a whole variety of purposes: for pumping water
out of coal and iron mines, for crushing ores, for the blast-furnace,
the foundry hammer and the rolling mill, and for fashioning the
final products. There are no factory returns for the iron industry
in the first half of the nineteenth century, but by 1871 blast-
furnaces, iron mills and foundries absorbed about 25 per cent
of the steam-power generated in the factories and workshops of
Great Britain and about 40 per cent of their labour force. It
cannot have required a much smaller proportion in the first
half of the century. It also required a semi-skilled adult male
factory labour force and large doses of capital and specialized
machinery, and thus helped to build up the national reserve of
these essential elements of a modernized economy.
On the other side of the account—the forward linkages—the
iron industry supplied a cheap and tough industrial material
that was an absolute necessity for an industrialized economy;
and the existence of this commodity in such cheapness and
abundance was an important part of the reason for Britain's
success in achieving an industrial revolution in advance of its
rivals. Good cheap iron was required for implements and tools
of all kinds from plough-shares to lathes, for military and naval
purposes of all kinds, from anchors to guns and gun-carriages,
Il6 THE FIRST INDUSTRIAL REVOLUTION
for hardware, for telegraphic wire, for building purposes and
above all for industrial machinery. The new method of casting
and forging developed at the end of the eighteenth century laid
the basis for the engineering industry that was to serve all British
industry and supply the world with machinery during the
nineteenth century. It stimulated inventions which not only
saved labour and made large-scale production possible on a
scale hitherto out of the question, but also laid the basis for the
standardized products and precision instruments which are the
basis of modern industry. By developing its own machinery the
metal industry helped to introduce technical improvement into
a wide range of the other industries. Machines and the machines
that make machines have proved to be capable of an infinite
sequence of improvement, and it is this process of continuing,
self-generating technical change that is the ultimate cause of the
sustained economic growth that we now take for granted.
For the characteristic of the iron industry that makes it a
crucial factor in modern economic growth is that it was to a
large extent, though not exclusively, a producers' industry. A
reduction in the price of iron meant a reduction in costs of
production for a wide range of other industries, and it also per-
mitted the substitution of iron for other less durable products
that had hitherto been employed because the price of iron was
prohibitive. The substitution of cheap cast-iron products for
expensive wrought-iron or imported products was one example.
But more important by far was the substitution of iron for
wood, which made it possible to produce textile machinery, for
example, with semi-skilled labour instead of with scarce wheel-
wrights, and to create a product which was not only more
precisely made than the old hand-made product but would
stand up to the rigorous day-and-night shift work and was more
easily repaired. Iron pipes were more efficient and more durable
for gas and water piping than wood or pottery pipes, and iron
joists added greatly to the strength of public buildings. In time,
of course, iron began to be found the most efficient material for
many other industrial purposes—shipbuilding, for example,
carriage making, brewers' and distillers' vats and so on. The
country which could supply this vital industrial material in
virtually unlimited quantities and at a relatively low price was
a country with a high growth potential.
But the sector which eventually made the biggest demands
on the iron industry, the development of which really tested the
iron industry's capacity to grow, was the railways. In the first
quarter of the nineteenth century iron-railway construction was
not negligible, but it was limited to small-scale localized
railroads, most of them attached to a mine or iron works and
dependent on the draught power of horses or stationary engines.
Those that went beyond the bounds of a private estate and were
more than adjuncts to a mine or an iron works required an Act
of Parliament, so we have surviving records of their length.
During the first 20 years of the nineteenth century nearly 200
miles of this kind of public railroad were opened to the public.
Within the decade of the 1820's nearly 100 more miles were
opened and the steam railway age began. The peak of railway
building activity was reached in 1847 when nearly 6,500 miles
of railway were under construction. By the 1850's the railway
construction boom was over and the main skeleton of the British
railroad network had been laid down. The speed at which it
had been constructed was quite phenomenal. Clearly it could
not have been achieved in such a fantastically short span of years
had it not been for the existence of an iron industry with a
tremendous capacity for expansion. Equally clearly, the speed
at which the network was completed was one of the reasons for
its high rate of profitability. By the late 1850's operating profits
on the railways began to be of the same order as the increase
in capital invested in the railways. In spite of manias and crises,
mismanagement and bad planning, the story of the railway
boom is an impressive success story.
Nor was this the end of the story, of course. When the British
railway network had been virtually completed, the expanded
iron industry was able to supply the railroad iron for foreign
railways. Already in the 1850's exports rose to be 39 per cent
of the gross product of the industry—during the first half of the
century they had averaged only 25 per cent. Till then three-
quarters or more of the output of the industry had gone to
supply the domestic demand and incidentally to support British
industry.
In short, the iron industry played a role in British industrial-
ization that was both pervasive and stimulating. It provided
cheaply and abundantly the commodity on which, more than
on any other single material except coal, modern industry was
to depend for its essential equipment. Nineteenth-century
I 18 THE FIRST INDUSTRIAL REVOLUTION
industrialization may indeed have been started by the textile
innovations of the end of the eighteenth century. But continuous
industrialization depended on the availability of coal and iron,
and would have been inconceivable without the steam-engine
and the technical progress in the iron industry which also took
effect in the last three decades or so of the eighteenth century.
Even today underdeveloped countries seeking a means of escape
from economic stagnation are inclined to see the establishment
of a steel industry as a first step. They may not always be right
in this assessment of their current problem but it is not difficult
to see why they drew this lesson from nineteenth-century British
experience.
CHAPTER 8
THE SOURCES OF INNOVATION
The process of industrialization which gathered momentum in

Britain during the second half of the eighteenth century and
initiated the sustained upward movement of real incomes that
the western world now takes for granted, involved revolutionary
changes in the structure and organization of the economy. The
origins of some of these changes can be traced to earlier
centuries. Some of them are still working themselves out. It is
generally agreed, however, that the crucial transformation
occurred fairly rapidly—certainly within the century between
1750 and 1850, probably in a considerably shorter time. The
temptation to time it narrowly, to identify a relatively short
period of time within which the crucial change can be said to
have taken place, is very strong. The discontinuities of history
are more dramatic than its continuities, and it is natural to want
to give them a precise time reference.
So the chronology of the industrial revolution has become a
fruitful source of controversy. There are those who would like
to trace its beginnings back to the beginnings of organized
manufacturing industry itself and others who insist that it is not
over yet, even for a fully industrialized country like Britain.
There are those who find overwhelming evidence for significant
discontinuity in the last quarter of the eighteenth century: and
others like Clapham and Schumpeter who are equally convinced
that 'if one wishes to refer the industrial revolution to a definite
historical epoch it can be located more justifiably in the second
quarter of the nineteenth than in the end of the eighteenth
century'.1
What answer one gives to this kind of problem of interpre-
tation depends of course on what precise question one is asking
of the data; in particular, in this context, what one means by
1
Schumpeter, Business Cycles, vol. 1, p. 254, ascribes this view to Clapham, Tugan-
Baronowsky and Spiethof.
I2O THE FIRST INDUSTRIAL REVOLUTION
the 'crucial' changes. Crucial in what sense? Was it the very

beginnings of organized industry that constituted the significant
change? If so, one must go back as Nef did to Tudor times and
earlier and give up all hope of ascribing the industrial revolution
to a definite epoch. Was it when technical change assumed a
distinctively modern character, involving the substitution of
machinery for man-power, of mineral for biological sources of
energy, of factory organization for domestic industry? If so,
presumably it is the cluster of innovations which took effect in
the last three decades of the eighteenth century which must
engage our attention. Was it when manufacturing industry
grew massive enough to shape the structure of the national
economy, to set the pace of economic growth, to determine
standards of life and ways of living for people in general ?If so,
we should probably focus on the beginnings of the railway age
in the second quarter of the nineteenth century.
Professor Rostow has given a special interest to the problem
of identifying and of timing the British industrial revolution by
making it the basis of his theory of the stages of economic
growth; that is, viewing it as the prototype of the take-off, ' that
decisive interval in the history of a society when growth becomes
its normal condition'.1 This of course is sroinff much further than
his predecessors have done in the ancient controversy over the
chronology of the industrial revolution. Their main purpose was
to sketch a chronology of British industrialization which could
be useful in the attempt to analyse the causes, character and
consequences of the central process. What Professor Rostow has
tried to do is to interpret British economic history in a way that
has strategic policy implications for those concerned with the
problems of today's pre-industrial economies, and this leads him
to view the industrial revolution as something nearer to an event
than to a process. So that although he claims that his is a return
to an 'old fashioned way of looking at economic development'
it is indeed a highly novel way of looking at economic history.
If he is right and it is possible to identify, in the history of those
countries which have successfully industrialized, a period of two
to three decades within which the transformation was sufficiently
decisive to ensure a continuance not only of the process of
industrialization, but also of the growth in average productivity
1
Rostow, Stages of Economic Growth, 2nd ed., p. 36.
THE SOURCES OF INNOVATION 121
and standards of living, then it is certainly important for today's

policy makers to understand the mechanics of the change. For
presumably in principle the changes which took place sponta-
neously in past 'take-offs' can be induced by appropriate
government action in today's underdeveloped countries.
Examination of the historical record for particular countries
in the light of the ' take-off' as formalized by Professor Rostow
has proved immensely fruitful in focusing the attention of
economists and economic historians on the significant discon-
tinuities implied in the fact of an industrial revolution.1 How-
ever, it is clear that the concept of the 'take-off' is a dramatic
simplification which does not stand up to a systematic attempt
to relate it to the known facts in any detail or to give it a definite
chronology. In the British case, for example, the choice of the
period 1783-1802 as the one in which the process of industrial-
ization became in some sense irreversible is, while understand-
able, not justified by detailed analysis.2 The period contained
some significant developments in the cotton and iron industries,
it included the canal mania, it saw an acceleration in the pace
of enclosures and of population growth and above all it was
characterized by a sharp upsurge in the amount of overseas
trade entering and leaving British ports. Each of these develop-
ments, however, formed part of a historical continuum in
which the period 1783-1802 was not unique. Population, for
example, and enclosures had begun their acceleration earlier
and reached their peak later. The canal mania was preceded
by an earlier burst of activity in canal construction which, if
it was less powerful was certainly unprecedented; and it was
followed a generation later by the more spectacular and
important railway mania. The cotton and iron industries had
begun to transform their techniques in earlier decades and by
1802 were still too small a part of total economic activity to carry
the national economy along by their own weight. The most
significant change of trend distinguishing this period is that for
overseas trade; any estimate of national output which is heavily
dependent on the foreign-trade series suggests an acceleration
in the national rate of growth during this period. On the other
1
W. W. Rostow (ed.), The Economies of Take-off into Sustained Growth (1963), reports a
conference of the International Economic Association on this theme.
2
See Phyllis Deane and H. J. Habakkuk, 'The Take-off in Britain', in W. W. Rostow
(ed.), op. cit.
hand, overseas trade was highly vulnerable to the fortunes of
war, and the upsurge of the 1780's and 1790's can easily be
explained by war conditions; the growth of trade in the 1780's,
for example, can be seen as a rebound from the abnormally low
levels to which it had been pushed by the American War, and
the prolonged growth of the 1790's must have owed a good deal
to the fact that Britain's main continental competitors were so
largely kept off the seas by the French wars. If we allow for these
special circumstances, the upsurge in foreign trade which
characterized the period 1783—1802 is not as spectacular as it
might appear at first.
What all this amounts to, in effect, is that we cannot justify
the choice of such a tightly specified and narrow period as
1783-1802 to represent the span of years within which the
industrial revolution took the kind of shape that made contin-
uing future industrialization inevitable. Yet the questions raised
by Professor Rostow's attempt to give a time reference to the
crucial changes in the industrial revolution remain interesting
and important. We know, for example, that some of today's
underdeveloped countries have begun to industrialize and have
failed either to maintain their original impetus or to generate
sustained economic growth. If we knew more about the mech-
anics of past industrial revolutions, in particular if we could say
whether there was an identifiable stage in the process beyond
which growth seemed to be inevitable, it might help us to
understand the conditions of successful industrialization. In this
connection the first industrial revolution, because it was
spontaneous, has a special interest.
One thing that is clear about modern economic growth is that
it depends on, more than anything else, a continuing process
of technical change. What the industrial revolution did was to
increase substantially the flow of innovations embodied in the
nation's economic activity and to turn it into a continuous, if
fluctuating, flow. In a pre-industrial economy technical progress
tends to be exceptional and intermittent. In an industrialized
economy it is accepted as part of the normal order of things.
Each generation expects to be able to improve on the productive
techniques of its fathers. Each new machine is designed to be
in some way more efficient than the machine it replaces in the
production process.
From this we may deduce that an industrial revolution
implies certain conditional changes. One condition of an indus-
trial revolution, for example, is a change in the attitude of mind
of the representative producer. For in a traditional type of
economy techniques are normally handed on from father to son
without change or thought of change. Another condition is a
change in the market environment. Where there is no economic
surplus or where the prospects of expanding sales are limited
or uncertain, producers have neither the freedom nor the
incentive to experiment with new methods. A third condition
is an increase in the flow of inventions or of ideas for change
suitable for incorporation into the productive process. How near
were these three conditions to fulfilment by the end of the
eighteenth, or the beginning of the nineteenth century?
I. CHANGES IN ENTREPRENEURIAL ATTITUDES TO

INNOVATION
There is no doubt that innovation was high fashion by the
middle of the eighteenth century.' The age is running mad after
innovation', said Dr Johnson with characteristic sarcasm. 'All
the business of the world is to be done in a new way: men are
to be hanged in a new way; Tyburn itself is not safe from the
fury of innovation.' 1 What we have to ask ourselves, however,
is how far this was a fashionable craze and to what extent did
it affect the behaviour of the representative producer, of the
multitude of relatively inarticulate, uneducated and far from
affluent individuals who took the day-to-day decisions about
the conduct of the nation's business. This is a difficult question
to answer because while it is nearly always possible to time the
first appearances of new methods—novelties get themselves into
the news—it is rarely possible to trace their gradual spread and
adaptation over a wider field.
Agriculture was still the principal industry and there seems
no doubt that the actively improving farmer was still uncommon
in the late eighteenth and early nineteenth centuries. Never-
theless there must have been many small farmers who were
forced by enclosures to find new ways of organizing their time
and their acreage. Traditional methods would no longer suffice
to earn a living for many of those affected by enclosures. They
had either to experiment with new crops or to spend more time
1
Quoted by Charles Wilson and William Reader in Men and Machines (1958), p. 2.
T H E
at domestic handicrafts like spinning or weaving or to go out

of business on their own account and join the agricultural and
industrial proletariat. But enclosure had been going on for
centuries. We cannot identify the period at which the enclosure
movement began to affect the methods of the majority of farmers
but it may be reasonable to associate it with the period when
forcible enclosure—parliamentary enclosure that is to say—
reached its peak. Enclosures of common land and waste by Act
of Parliament, which had involved about 75,000 acres in the
period 1727-60, affected 478,000 acres in the period 1761-92
and over a million acres in the period of the French and
Napoleonic wars, 1793-1815. By the 1820's the open-field type
of agriculture was becoming a rarity, though the antiquated
rotations and attitudes had by no means disappeared by the
middle of the nineteenth century. When James Caird toured the
country in 1850/1 the old 'two crops and fallow' rotation of the
open-field system was still common in many parts of England
and there were still farmers who regarded manure as useless
muck.1
Trade was the other major industry of pre-industrial Britain,
and here there is evidence of changes in methods of organization
and procedure that probably widened the opportunities and
reduced the uncertainties for all merchants engaged in trade on
a large scale. Within the restrictions imposed by the Bubble Act,
businessmen were actively experimenting with new forms of
organization. By the end of the century the joint-stock associa-
tion, without incorporation or limited liability but with freely
transferable shares, was a common form of unit. There was, too,
a steady development through the eighteenth century in the
business of insuring traders' stocks against fire, which must have
greatly reduced the element of uncertainty in the merchants'
business. Marine insurance, which had been barely distin-
guishable from frivolous speculation in the early part of the
century had become a skilled professional service of some
consequence by 1771, when the Society of Underwriters at
Lloyd's Coffee House subscribed to build a new Lloyd's Coffee
House and to separate itself from the miscellaneous gamblers
and brokers of all kinds who frequented the old Coffee House.2
Developments in transport also revealed new entrepreneurial
1
J. Caird, English Agriculture 1850 and 1851 (1852).
2
See H . E. Raynes, A History of British Insurance (2nd ed. 1961).
attitudes in the eighteenth century, and by changing the
pattern of economic opportunity for the trading community in
general they must have had significant secondary repercussions.
In the business of providing communications, private enterprise
was beginning to encroach on sectors hitherto regarded as the
province of local government and the new decision-takers were
often less conservative than the old. The managers of turnpike
trusts, for example, realized more readily than the parish
councillors the advantage of employing a skilled engineer—even
a self-made expert like John Metcalf—in building cheap durable
highways, and a new career was thus opened up for the new
genus of road engineer. Similarly, canal builders gave employ-
ment to engineers like James Brindley who brought new
dimensions into the thinking of the inland navigators and
opened up a new range of economic opportunity to those whose
livelihood depended on transporting heavy raw materials across
country.
In manufacturing industry the technical transformation was
most evident and most complete in the textile industries,
particularly cotton, and in the metal-using industries, particu-
larly iron. In textiles it was only the cotton industry that had
been revolutionized by the early years of the nineteenth century,
but it was clearly just a matter of time before the other textile
industries responded to competition and example by adapting
the new machines to their special needs. Wool-carding engines
were being power-driven in Yorkshire in the early 1770's, and
attempts were being made in the 1790's to comb worsted and
to prepare flax and silk so that the spinning machines which had
been so spectacularly successful in cotton could be applied to
other textiles. The Jacquard loom, a French invention origin-
ating in the hard-pressed silk industry and patented in 1805,
spread rapidly in England in the 1820's when an English
improvement permitted a more compact version suitable for
cottage industry as well as factory industry. In the iron trade
events moved as rapidly at the end of the eighteenth century
as they did in cotton. The transition from charcoal-fired
furnaces was virtually complete by the first decade of the
nineteenth century and the traditional technology was thus
completely displaced. Even the village blacksmith was adopting
new techniques where coal was accessible and cheap, though
in these more localized branches of the industry the full effect
of the change had to await the spread of canals and later of
railways, which eventually made coal cheap throughout the
country. Similarly techniques in the other metal industries,
and coal, were altered at the mining stage by the use of the
steam-engine for power-pumping and hoisting machinery, and
at later stages by the use of coal instead of charcoal. It was not
until later in the nineteenth century, however, that radical
changes were introduced into the non-ferrous metal manufac-
turing processes.
In the building industry, too, there were important changes
in technique which dated from the early stages of the industrial
revolution. The shortage of timber was already a significant
factor in the early part of the eighteenth century, and it led first
to a greater use of stone in building (at any rate in the areas
where it was easily quarried), and then to a more extensive use
of brick. The clay deposits from which bricks were made were
widespread and the spread of the canals first, and even more
so of railways later, made it easier to feed the brick kilns with
cheap coal. The growing output of bricks prompted the
imposition of an excise tax in 1785, and from that date
consequently we have a record of the country's brick output.
Within a couple of decades after 1785/9 the output of bricks
expanded by 80 per cent, a development which reflected more
than anything else the effectiveness of the canals in providing
the brickmakers with a cheap means of transport for both fuel
and final product. It took another 30 years to bring a further
expansion of 80 per cent in the annual output of the brick
industry and by then, in the late 1830's, the railway age was
well under way and was creating not only another channel of
transport but also a new source of demand for bricks. There
were important developments, too, in other building materials
before the end of the eighteenth century—in plaster for wall-
facing, for example, in mortar for joining bricks or stone and
in concrete for foundations; but it was not until the 1820's that
the many experiments in cement-making led to Portland
cement, the material of which the London main drainage system
was constructed a generation later.
In most other manufacturing industries the only major
technological change which dates effectively from the late
eighteenth century was the use of steam-power instead of water-
or horse-power. This, however, had a very limited impact for
it was important only in units of production which were already

operating on a large scale. The first two steam-engines set up
in London, for example, were both at breweries, but it was only
in big established centres of population like London or Bristol
or Dublin that the individual brewer's market was on a scale
sufficient to warrant the purchase of a steam-engine. Where the
market was less securely large the attempt to operate a steam-
engine was more likely to land the entrepreneur in financial
difficulties. The ill-fated Albion flour-mill, for example, the first
mill to be powered by steam, was set up in London at a cost
of £60,000, began operations in 1786 and after several
unsuccessful years was completely destroyed by fire in 1792.
This was an object-lesson to other manufacturers who had the
capital and the enterprise to start such a project but not the long
purse required to carry it through the period of problems and
miscalculations which must attach to every radical change in
existing practices. Even in the textile mills of Lancashire,
Cheshire and Yorkshire, the bulk of the power was still provided
by water in 1800.1 The fact is that major innovations require
a period of development before they become commercially
viable and few eighteenth-century manufacturers were rich
enough to face a potentially long period of loss or nil return.
Most 'manufacturers' were still 'handicrafts' at the start of the
nineteenth century; most machinery was wooden, clumsy,
easily broken or worn and dependent for its efficiency more on
the acquired skill of its operator than on its basic design. There
was little shortage of unskilled labour and few producers would
have found it profitable to substitute machines for human effort.
Scotswomen were still carrying coal on their backs up ladders
reaching 100 feet and more, though the steam-engine could
have hoisted it to the surface more quickly and effectively. As
late as 1831, the census list of activities headed 'retail trade and
handicraft' included shipbuilding, wood and furniture, watches,
toys and musical instruments, food and drink, fur and leather,
printing and paper industries as well as blacksmiths and some
of the iron-founders, weavers and dyers.
On the other hand, a catalogue of the various kinds of
innovation which were introduced into Britain in the second
half of the eighteenth century produces an impression of
1
D. S. L. Cardwell, 'Power Technologies and the Advance of Science, 1700 1825',
Technology and Culture (1965), p . 192.
accelerating technical progress and it is evident that significant

changes were already taking place in the character of the
entrepreneurial decision-making process as a result of organi-
zational and institutional developments. In agriculture, for
example, the effect of the long enclosure movement on the
structure of English landownership and tenure was to shift more
of the power, and the funds, for technological change towards
the class of agrarian capitalists who had the incentive and
know-how to experiment with new ideas, to adopt radical
cost-reducing techniques, and to influence more conservative
farmers. By 1780, according to the land tax returns, more than
four-fifths of English land was cultivated by tenant farmers or
large landowners. The latter were well placed to develop new
techniques to the point of commercial viability and to propagate
best-practice farming. A growing number of professional land
stewards helped to raise technological standards both by their
own actions and by advising tenants. Progressive tenants were
much sought after by landowners who saw that their rent
incomes hinged on the technological dynamism of their tenants
and these in their turn were prepared to offer high rents on
estates where the owners were known to spend generously on
capital improvements such as farm buildings.1 Since most
tenants were on fixed-term leases, increasingly on short leases,
there was considerable scope for renegotiating rents in response
to fluctuations in prices and costs. As a result, English farmers
tended to be more responsive to opportunities for technological
change than their peasant contemporaries in Europe.
Changes were also taking place in the organization of
industry in manufacturing which had implications for the
character of entrepreneurial decision making. On the eve of
the industrial revolution, the decisions which determined
the manufacturers' response to market forces and the ways in
which productive resources were deployed to meet changes in
conditions of demand or supply were generally taken by the
merchant-capitalist. Except at the purely local level of the
village shop where the producer met each customer's specifi-
cations individually, the typical eighteenth-century manufac-
turer worked to the orders of a merchant who supplied him
with his raw materials and took up his finished product. The
1
H. J. Habakkuk, 'English Landownership 1680-1740', Economic History Review
(1939/40).
THE SOURCES OF INNOVATION I2O,
exact way this was done varied from industry to industry and
(with the development of regional specialization) from region
to region. Broadly speaking, however, the system was similar
over a wide range of trades. In the textile industries, for ex-
ample, merchants operating from Norwich, Leeds, Manchester,
Nottingham and London, gave out raw and spun wool, cotton,
flax or silk to an army of spinners and weavers to work up in
their own homes, and received back the yarn or cloth which they
might then reissue for further processing (finishing, dyeing,
printing) in other homes or small workshops. Sometimes a
merchant had his own finishing sheds. Occasionally, as in the
West of England woollen trade which specialized in fine quality
cloth, the merchant was also a manufacturer and had weaving
sheds which he could keep under closer supervision for quality-
control than was possible under the putting-out system. Gener-
ally the worker in domestic industry had to do his own fetching
and carrying, either on his own back or in his farmcart, and to
buy his own capital equipment or tools. In the hosiery industry
where the basic equipment—the stocking frame—was relatively
expensive, the merchant who supplied the yarn and took up the
completed hose also rented out frames, and sometimes floor
space, as part of his bargain with the independent knitters.
Even in the metal trades, the domestic putting-out system
prevailed in all but the heavy smelting branches of the industry.
Only at the blast furnaces, where the need to keep the furnace
at a constant level of heat required a continuously employed
labour force, was the iron manufacturer making all the tech-
nological and marketing decisions in relation to his product.
Potters, or builders, generally worked directly to the local
customer's specific requirement and there the productive unit
consisted of the individual potter (or jobbing builder or small
master) and the craftsmen and labourers were employed on a
day-to-day or task-by-task basis. In the pottery townships,
where potters tended to congregate because of the availability
of suitable clay, small workshops with some division of labour
were common; but the men were all skilled craftsmen and both
their coming together and their specializing were ad hoc
arrangements of mutual convenience rather than a form of
industrial capitalism. Whether working independently or in
groups, they normally produced on a bespoke basis directly to
the requirements of an individual customer or merchant.
In most other manufacturing units, especially those processing
agricultural products, the majority of producers operated in
small domestic units for strictly local markets, though in the
larger towns (especially London) sizeable workshops and even
factories could be found by the early eighteenth century.
Sugar-refining, dependent on imported raw material, was
already a factory trade concentrated in the main receiving
ports—Bristol, Liverpool, Glasgow and London. Beer was
produced for sale in units of all sizes from large-scale brewers
to innkeepers and victuallers supplying their own premises.
Indeed, in most industries there were units of production
representing the whole spectrum of industrial organization from
household production through small workshops to large factory,
from bespoke trade to mass-produced goods. Typically,
however, manufacturing industry in the mid eighteenth century
was carried on by skilled craftsmen working on their own,
either for direct sale to the customer on materials bought from
local farmers or tradesmen or—as market horizons widened to
national and international proportions—as outworkers for
merchants who took the marketing decisions (i.e. how much of
each kind of commodity to produce and at what price) and who
earned the profits arising from successful speculation in the
markets for raw materials and finished goods.
Under this domestic system of industry, technology was thus
under the control of men whose craft tradition and long
apprenticeship was better designed to maintain standards of
quality than to develop new processes of production or new
products. The fact that, for many of those producing on a small
scale, incomes earned in manufacturing were secondary to those
earned in agriculture made them even less ready to contemplate
changing their traditional techniques. The dynamic profit-
seeking entrepreneur was more likely to be a merchant than a
manufacturer in the early eighteenth century and his innova-
tions tended to take the form of opening up new markets (for
raw materials or finished goods) or developing new techniques
of commercial organization (e.g. in management, insurance or
finance). The shift to a factory system of organization that was
associated with mechanization and the use of steampower in the
industry transformed by the industrial revolution involved a
crucial change in the nature of the decision to innovate. Once
the productive process came fully under the control of the
professional capitalist entrepreneur, accustomed to assess the
profits implications of changing the structure of his inputs, the
probability that opportunities for profitable innovation would
be rapidly identified and taken up became distinctly higher.
The change in the character of the decision to innovate is an
important part of the explanation for the acceleration in the
pace of technical progress associated with the industrial revo-
lution and for the fact that the acceleration was sustained
through the nineteenth and twentieth centuries.
The conclusion suggested by this survey of the evidence on
innovation in the eighteenth and early nineteenth centuries is
that it was only when the potential market was large enough,
and demand elastic enough, to justify a substantial increase in
output, that the rank and file of entrepreneurs broke away from
their traditional techniques and took advantage of the technical
opportunities then open to them. This occurred in a few
industries where the economic stimulus and the technical
opportunity were present in strength. Elsewhere innovation was
the prerogative of an enterprising few and had often in fact been
developing since the early decades of the eighteenth century.
There is no evidence to suggest that, except in a few industries
and regions, the majority of producers were any more ready to
innovate in 1815 than they had been in 1750.
2. CHANGES IN THE MARKET ENVIRONMENT
Innovation required an economic stimulus and a technical
opportunity. If innovation was to be widespread the stimulus
had to be massive and the opportunity accessible. Probably the
most effective stimulus to innovation is a change in the market
environment. What evidence do we have for changes in the
market environment towards the end of the eighteenth century?
There are two sides of the market to be considered—the
domestic market and the overseas market. What can we say, first
of all, about the domestic market? Here there seems to have
been a significant set of changes in the distribution of incomes
in the first half of the century, which stemmed from the
abnormal proportion of abundant harvests occurring in the
three or four decades preceding 1755. A good harvest meant low
prices for foodstuffs and higher labour costs, hence it also meant
low profits for farmers who bought their labour and falling rents
for landlords. A succession of good harvests meant that farmers
and landlords had no chance of recouping their losses. This in
effect was a period of acute agricultural depression.
On the other hand, the reverse was true for the rest of the
community. Cottagers and paupers and agricultural labourers
found that a good harvest meant more work and more wages
and abundant food from the cottage plot or as gleanings from
the big estate. A succession of good harvests meant that the
granaries were always full and prices stayed low so that at the
end of the harvest year, when they had to make up their own
shortfall by purchasing food, they could do so cheaply.
Labourers in non-agricultural occupations, who expected to
buy nearly all their food, benefited still more from a good
harvest. They found that their wages went further and they had
more money left over to spend on luxuries like drink (this was
also the gin age), sugar and clothing. Industrialists who got their
raw material from agriculture (and a large proportion of them
did so in this pre-industrial economy) found that their costs fell
in a year of good harvest and that most of their customers were
more affluent, so that their profit and sales tended to rise. A
succession of good harvests encouraged them to hire more
labour, to invest more capital, to expand their output, and to
reap the economies of scale which were obtainable from a higher
level of output. Merchants who sold British agricultural products
in foreign countries found that they could lower prices without
reducing their profits per anit of output and that as their
markets expanded in response to lower prices their profits
soared. Encouraged by the corn bounty (which gave subsidies
of 5«5\ for every quarter of wheat exported and smaller, though
still substantial amounts, for the cheaper grains) they managed
to raise English exports of corn to over a million quarters by
the early 1750's. This made the balance of trade more favourable
than it would otherwise have been, increased the national
supply of money and further stimulated trade.
In sum, the effect of a succession of good harvests was to make
farmers and landlords poorer and to make all other members
of the community richer. In terms of Gregory King's analysis
of the families of England and Wales we may say that freeholders,
farmers and all gentlemen and members of the nobility who got
their incomes from land (probably less than 20 per cent of the
nation's families) found their incomes lowered by a succession
of good harvests: and the other members of the community, the
majority, found themselves richer. Or to put it another way, the

profits from agricultural enterprise fell, the profits from non-
agricultural enterprise rose and the lower income groups in
general got more regular wages and more goods for their money.
All this represented a marked stimulus to British industry and
trade which was sustained for rather more than a generation.
It is hardly surprising that the evidence is strong for an
acceleration in the pace of economic growth dating from just
before the middle of the eighteenth century.
In the later 1750's the run of good harvests was broken and
in the second half of the eighteenth century the pattern
accordingly changed. But the evidence does not suggest that the
level of domestic demand was falling back in the 1760's and
1770's.1 On the contrary, the upsurge of investment in turnpikes
and in canals, the increasing shipments of coal from Newcastle
to London (29% higher in the 1770's than in the 1750's), and
the strong rise in net raw cotton imports which were more than
70% greater in the 1770's than in the 1750's all point to a
buoyant domestic market in spite of the relative stagnation in
the volume of domestic exports. There were two ways in which
changes in the domestic market may have been important in
stimulating British industry and trade at this period. The first
was through the effect of a growing population, which raised
the volume of national expenditure even if it did not raise
expenditures per head proportionately. The second was through
the enlargement of the money economy which resulted from
enclosures. The dispossession of the cottager from common
and waste, and the buying out of the smaller smallholders who
were too poor to afford the necessary investment in fencing and
ditching, meant that fewer and fewer families were producing
the food and clothing that they themselves consumed. Of course
this enlargement of the money economy had been going on as
long as (indeed longer than) the process of enclosures, whether
voluntary or statutory. But it is reasonable to presume that in
the period of rising prices which characterized the period from
the 1750's to 1815 the cottager and small smallholder found it
more difficult to resist the consolidating landowner and the
1
See D. Eversley, 'The Home Market and Economic Growth in England, 1750-80'
in Land, Labour and Population in the Industrial Revolution, ed. Jones and Mingay, op. cit.,
for a systematic presentation of the evidence for the view that the situation continued
to be favourable to home demand from 1750 to 1780.
expanding farmer than in the years of agricultural depression.
By the beginning of the nineteenth century the 'cottagers', who
had comprised about a quarter of the families of England and
Wales when Gregory King drew up his table, and whose real
incomes depended to a considerable extent on goods and
services which never reached the market, were no longer
important enough for Colquhoun to distinguish separately in
his corresponding table of families. The subsistence producer
had by then been eliminated from all but a few relatively
inaccessible regions.
The other aspect of the market environment was the overseas
market. To the extent that prices and costs declined in British
agriculture and industry this must have made it easier to sell
British goods abroad and one would expect British domestic
exports to rise in consequence. The rising trend in domestic
exports in the 1730's, 1740's and 1750's can thus be regarded
as a secondary repercussion of the contemporary changes in the
home-market. The fact that the big upsurge of domestic exports
in the 1740's (an increase of about 50 per cent in volume)
coincided with a decline in re-exports seems to confirm the view
that the cause of the increase lay not so much in a spontaneous
growth of foreign demand as in the more favourable terms on
which British goods were being supplied.
Nevertheless there were significant signs of change in the
overseas market situation which became increasingly evident in
the second half of the century though they were obscured at first
by the dislocation caused first by the Seven Years War and then
by the American War of Independence. The fact is that
populations and incomes were growing in Western Europe and
North America and the potential markets for British goods were
widening rapidly. The rebound from the American War was
spectacularly sharp and a high rate of growth persisted through
the 1790's when the French wars crippled Britain's major
European competitors. The domestic-export and the re-export
trades expanded strongly together in face of this widening
horizon of economic opportunity. Hence although British mer-
chants and industrialists had to grapple with rapid inflation and
high taxation, they were so favourably placed in command of
the world's trade routes that they could hardly fail to expand
their sales. In the products of the cotton and iron industries they
had the additional advantage of being able to supply better
qualities of goods at lower prices.
We may conclude then that factors on the side of demand
appear to have been positively encouraging to innovation
through most of the eighteenth century. When population and
national income were relatively stagnant in the early decades
the low prices for food and industrial raw materials associated
with an abnormal run of good harvests were redistributing
incomes in favour of the agricultural poor, the urban working
classes and manufacturers generally. As a result, the period of
'agricultural depression' was stimulating to industrial expan-
sion even if it reduced the investible agricultural surplus. When
the upsurge in international trade which had characterized the
second quarter of the century slackened in the third quarter,
domestic demand seems to have maintained a healthy momen-
tum. Finally, in the last two decades or so of the century
Britain found herself in a peculiarly advantageous position to
exploit the rapidly expanding markets in Western Europe and
North America.
3. CHANGES IN THE PACE OF INVENTION
It is not enough to have the economic opportunity to innovate:
it is also necessary to have the technical opportunity. Can we
time the flow of new inventions and ideas which became
available to British producers in the course of the eighteenth
century? Can we assess their significance in the light of current
bottlenecks and limiting factors to economic growth?
Some idea of the pace of invention can be obtained from the
annual record of patents taken out by inventors, though not all
inventors tried to protect their copyright, and not all inventions
were productive. The break in this series comes quite clearly in
the 1760's when for the first time the number of patents sealed
exceeded 200 in a single decade. Only once before—in the
booming 1690's—had they exceeded 100. From then on the
numbers expanded steadily, increasing by about 50 per cent per
decade until the 1810's and 1820's, when they rose more
modestly, and accelerating again in the 1830's and 1840's, so
that in this latter decade they were twenty times as numerous
as they had been in the 1760's.
The number of inventions patented is unfortunately a very
weak index of the number of new processes becoming available
to British entrepreneurs, still less of the productive significance
of these new inventions. The quality and character of inventions
was a great deal more important in determining their impact
than the number of patents. Clearly the immediate significance
to potential innovators of a new invention depends on the extent
to which it breaks a current bottleneck, or reduces some of the
limiting factors to expansion of supply, or meets an unsatisfied
demand. Kay's flying shuttle, for example, patented in 1733,
TABLE 3. Numbers of English patents sealed in each decade
1630/39 75 1740/49 82
1640/49 | 175O/59 92
l6 4 1760/69 205
5°/59 /
1660/69 31 1770/79 294
1670/79 50 1780/89 477
1
1680/89 53 79 o /99 647
1690/99 102 1800/09 924
1700/09 22 1810/19 1124
1710/19 38 1820/29 H53
1720/29 89 1
83°/39 2453
I73O/39 56 1840/49 458i
SOURCE: B. R. Mitchell, Abstract of British Historical Statistics (1963), p. 268.
permitted an energetic weaver to do the work of two. Yet it

spread slowly and brought its inventor little profit since the
current shortage was not of weavers but of spinners and Kay's
invention merely made that shortage more acute. Similarly a
quarter of a century after Cartwright had introduced his
power-loom there were still only 2,400 in the whole of the
country, for there was no shortage either of hand-looms or of
people to operate them, and coal was still an expensive
commodity. On the other hand, Hargreave's spinning-jenny
provided a machine which multiplied the output of the indi-
vidual spinner some sixteen-fold and spread like wildfire through
cottages that had hitherto depended on the old hand-wheel:
and Arkwright's water-frame produced yarn of sufficient
strength to serve as warp as well as weft and so satisfied from
British sources what had hitherto been a largely frustrated
demand for Indian calicoes.
The most crucial and general of the bottlenecks limiting the
expansion of the British economy on the eve of the British
industrial revolution (that is in the middle of the eighteenth
century) were two: they were the shortage of wood and the
shortage of power. These were closely related problems. Wood
was the universal material of which capital assets were made.
THE SOURCES OF INNOVATION I37
It was needed for ships, for machinery, for vehicles, for drain-
pipes, and for buildings; it was also needed for fuel in areas
where coal was inaccessible or where technical problems pre-
vented the use of coal (as in the iron industry). It was unsatis-
factory as a construction material because it was clumsy,
rapidly worn out by weather or friction and easily burnt, so that
it had a short life on the average and was not very adaptable
when used for the moving parts of machinery. Its shortage
restricted the output of industries which depended on it for fuel,
of which the most important was the iron industry.
The only forms of power available to the pre-industrial
economy were muscle-power, water-power, and wind-power.
None of these was capable of development to a form which
would support a modern industrial economy. The watermill
and the windmill had been available for centuries and a good
deal of ingenuity had been put into their design. But they were
subject to two inescapable limitations—they were erratic and
unpredictable in that they depended on weather conditions
(and there is nothing less predictable than the British weather),
and it was necessary for the power they generated to be used
on the spot.
The most important achievement of the industrial revolution
was that it converted the British economy from a wood-
and-water basis to a coal-and-iron basis. Wood was a dwindling
resource with a strictly limited future as a construction material
in an industrial context. Water-power and wind-power were
only partially under the control of their operators and had a
very limited potential. The power of the average windmill or
water-wheel was in the region of 5-10 h.p. and in their most
elaborate and expensive forms they seemed unable to generate
more than 30 h.p.
If we were to try to single out the crucial eighteenth-century
inventions which set the stage for the industrial revolution by
precipitating a continuous process of industrialization and
technical change, and hence sustained economic growth, the
strongest candidates would seem to be the steam-engine on the
one hand, and on the other Cort's puddling process which made
a cheap and acceptable British malleable iron. Watt's steam-
engine, first constructed in 1775, had a wide range of
immediately feasible applications. Applied to water-pumping
and to hoisting-machinery it made it possible to get cheap coal
from deeper and deeper seams. Applied to the blast-furnace, it

provided a blast strong enough to burn coke instead of charcoal
and ensured continuous operation of expensive blast-furnace
equipment wherever coal and iron ore were available, instead
of being dependent on a seasonal localized water supply.
Applied to industrial machinery it powered spinning and
weaving factories, breweries, flour-mills and paper-mills and
effectively removed an important limiting factor to the large-
scale operation of a wide variety of industries. These possibilities
were already apparent by the first decade of the nineteenth
century. They might have developed faster and further had not
Watt restricted the spread of his engine by means of a patent.
Water-power was still by far the main source of power in most
fields of manufacture at the beginning of the nineteenth
century.1 Later in the nineteenth century, steam applied to
locomotives made it possible to transport coal and iron and
bricks and other heavy raw materials or producers' goods to any
part of the country; and later still, applied to iron ships it
permitted the import of cheap food from the New World and
so carried the process of industrialization to the ultimate
conclusion of international specialization.
The other crucial invention, Cort's puddling and rolling
process, which was diffused from the late 1780's, put the
finishing touch to the series of inventions which were involved
in the change-over from charcoal to coal in iron manufacture.
It permitted the industry to escape rapidly from dependence on
diminishing supplies of native timber and expensive foreign
bar-iron, and to exploit the relatively abundant British resources
of iron ore and coal. Again, a tightly restrictive bottleneck was
broken quickly and effectively. But it was the longer-term
results which were most significant. The use of iron as the
material of which producers' durable goods were most com-
monly constructed had revolutionary consequences. Iron
machinery was long-lasting, could be run continuously with
little wear, would stand up to stress, could be fashioned into
standard shapes which ensured more accurate results than the
eye of the skilled craftsman, and above all it was cheap. The
introduction of cheap iron was the beginning of the machine
age and of the engineering industry. Applied to steam-engine
1
G. N. von Tunzelmann, Steampower and British Industrialization to i860, p. 125.
boilers, for example, British wrought-iron was cheaper than

copper and safer under high pressure than cast-iron. Applied
to machine-tools it made precision work possible for the first
time, and thus was susceptible of infinite development. Henry
Maudslay, for example, the first great British machine-tool
manufacturer in the modern tradition, set a new standard of
accuracy by using metal alone as his material of construction.
In 1802 he set up in Portsmouth dockyard a set of woodworking
machines designed to mechanize the manufacture of pulley
blocks. 'Driven by a 30 h.p. steam-engine the machines made
130,000 blocks a year, cut the labour force from 110 skilled men
to 10 unskilled men and saved the Admiralty almost a third of
the capital outlay in a year...Some of the machines that
Maudslay built for Portsmouth remained in use, for more than
a century after his death in 1831.?1 Finally, applied to railways
and ships, iron was a construction material of extraordinarily
high strength and with the aid of the steam-engine revolution-
ized the transport industry.
The distinctive feature of both these inventions is that they
introduced radical technological changes into the industries
producing capital goods and it was this that gave them their
tremendous continuing impact in the process of industrializa-
tion. By their effects on the price of capital goods they eventually
raised national investment from pre-industrial to industrial
levels, and they economized in capital by making existing funds
go farther in terms of the income-creating assets that they would
buy. By affecting the rate at which new techniques could be
introduced into different sectors of the economy they stepped
up the rate of innovation. The adoption of a metal-using
technology employing decentralized sources of power, which
the inventions permitted, lies at the heart of the first industrial
revolution.
What conclusions can we draw, in the light of the above
discussion, about the timing of the technical changes which
made the first industrial revolution? At this point we may
reasonably focus on a consideration of manufacturing industry,
on the grounds that the associated innovations in agriculture,
commerce and pre-railway transport were merely permissive
factors which could equally well have been associated with the
continuance of a pre-industrial economy.
1
T. K. Derry and Trevor I. Williams, A Short History of Technology (i960), p. 352.
(1) The first point that seems to stand out fairly clearly is that
the eighteenth-century environment was generally favourable
to technical change. Over a large part of the century, beginning
somewhere before the middle and accelerating in the second
half, there seems to have been a tendency for the demand for
British manufactures to exceed their supply. The resultant
stimulus to technical change was reflected in the wide interest
in innovation. Innovation was fashionable, if not yet common,
and it was sometimes, though by no means always, highly
profitable.
(2) The fashion for innovation was made more effective by
changes in the mode and scale of production associated with the
new technological opportunities that emerged decisively in the
late eighteenth century. The industrial-capitalist who owned
the plant and equipment of factory industry had more incentive
and scope for rethinking the basic technology of manufacture
than either the merchant-capitalist or the artisan craftsman.
What is particularly striking moreover, about the industrial
scene of the second half of the eighteenth and early nineteenth
centuries is the active and fruitful collaboration between indus-
trialists and scientists interested in technical progress.1 This
collaboration was to prove important not only in shortening the
process of trial and error which lay between a major invention
and a commercially profitable innovation, but also in the less
revolutionary, but in the long run equally important, cost-
reducing improvements in the efficiency of machines or processes
already widely adopted.
(3) There were some sectors in which the generalized stimulus
to expand output was intensified by an increasing technical
difficulty in so doing. Innovations that broke through these
technical limitations were particularly successful and particu-
larly rapidly diffused.
(4) The number of these sectors of highly successful, rapidly
diffused technical change was for a long time rather few. Before
the 1820's they were virtually limited to the cotton industry and
to the iron industry. In addition there was the steam-engine,
which was successfully applied over a wide range of industries,
but which before the railway age was important only in cotton
and iron and mining.
1
A. E. Musson (ed.), Science, Technology and Economic Growth in the Eighteenth Century,
p. 62.
(5) Nevertheless, if the industries whose techniques had been

effectively revolutionized by the second decade of the nineteenth
century were few and accounted directly for a relatively small
proportion of total national output, they contained the seeds of
continuing industrialization. To some extent this was because
there were other industries with similar technologies. It was only
a matter of time, for example, before the innovations which
began in the cotton industry were adapted to other textile
industries. To some extent it was because they directly stimu-
lated other industries—as iron stimulated coal-mining and
coastal shipping, and textiles stimulated processing and clothing
trades. But largely it was because the development of the
steam-engine and of the iron industry had such far-reaching
implications for producers' goods industries in general and
through them for investment and innovation in all manufac-
turing industry.
CHAPTER 9
THE ROLE OF LABOUR
An inescapable condition of successful economic development

is the existence of an expanding, mobile and adaptable labour
supply. To achieve the shifts in the structure and rate of growth
of national output of which an industrial revolution is composed,
there must be profound changes in both the quantity and the
quality of the labour force. In this chapter we shall consider the
character of these changes as they appeared in the first industrial
revolution and try to explore some of their causes and
consequences.
To begin with, it is important to see the factor of production
labour in some sort of perspective. If we ask ourselves what are
the basic determinants of economic growth, for example, we can
classify them under four main heads: natural resources,
technical progress, accumulation of capital and increase in the
quantity and quality of the labour supply. Basically, that is to
say, the rate at which any economy can expand its output of
goods and services depends on four fundamental factors:
(i) The rate at which it can enlarge its stock of natural
resources. Thus for example, a country which can bring new
land into cultivation or open up new mineral resources or make
passable roads or rivers that were formerly impassable or
passable only at certain seasons can effectively extend its
resource base and so increase its product per unit of labour or
capital. Generally there are limits to the extent to which a
country can increase its natural resources, though a country
such as nineteenth-century America can go on doing so for a
considerable period of time through the medium of an advancing
frontier; and in late eighteenth- and early nineteenth-century
England the same kind of process was in operation, though of
course to a lesser extent, through the enclosure of waste lands
and the elimination of crucial transport bottlenecks whose
removal opened up hitherto inaccessible mineral resources.
142
THE ROLE OF LABOUR 143
(2) Technical progress also permits the production of a larger
output of goods and services with a given input of labour and
capital. An innovation in productive technique (a new rotation
of crops for example or the use of coke instead of charcoal fuel)
or a new machine will reduce costs and so enable entrepreneurs
to increase output per unit of input.
(3) The third determinant of the rate of economic growth is
the rate of new investment; that is, through an increase in the
input of capital into the productive process. More ships or more
canals carry more trade; more pumping machinery and hoisting
equipment means more coal raised; and so on.
(4) The fourth determinant of the rate of economic growth
is the rate of expansion of the labour supply. If people work
harder or longer or more regularly or more skillfully, or if the
numbers of the actively occupied population grow, this leads to
a larger output of goods and services.
These determinants are closely interrelated. It is not usually
possible, for example, either to enlarge the national stock of
natural resources or to introduce technical change without
increasing the rate of investment. In the end, the capital
required per unit of output may be smaller, but at the outset the
absolute amount of capital required for the productive process
is almost invariably larger. Conversely, of course, a rise in the
rate of investment will often make the existing natural resource
supply more valuable or will raise the rate of technical progress
or will bring into use unemployed labour. A new machine is
generally more up-to-date and more efficient than the one it
replaces, and even if the differences are individually trivial a
continuous stream of such minor improvements in techniques
or machines, associated with a continuous increase in capital
formation, will mean a steady rise in the efficiency of capital,
a steady technological advance. Moreover, any substantial
enlargement of the nation's stock of natural resources, or any
appreciable increase in capital investment, or any significant
technical advance can be expected to require either some
increase in the numbers engaged in productive activity, or some
movement of workers between occupations or both. It is difficult
to conceive of a way of enlarging the natural resource endow-
ment or of adding to the national capital which does not involve
an increase in the labour supply to the sector affected. Even
where technical change in the industrial revolution was labour-
T H E FIRS
144 T INDUSTRIAL REVOLUTION
saving in its effects, the immense impetus that it gave to the

expansion of investment promoted an eventual increase in the
demand for labour.
In principle, of course, it is always possible for an expanding
sector of the economy to attract labour to itself by offering
workers a higher wage than they can get elsewhere. Where the
existing labour force_is fully employed this represents the only
way of expanding output. If the immediate cost-reducing effects
of a given innovation are large enough and the risks are slight
it may be worthwhile offering quite considerable increases in
wages. On the other hand, if there is a certain amount of
unemployment or under-employment of labour, so that labour
does not have to be lured away from other occupations, it may
not be necessary to offer wages that are above the prevailing
rates. Clearly, however, the lower the increase that is necessary
to attract an adequate labour supply, the more lucrative will
be the prospects of a given innovation or a given new investment.
Hence an elastic labour supply—access to an abundant supply
of labour at a relatively low price—is immensely encouraging
to potential investors.
The fact that British entrepreneurs in the late eighteenth and
early nineteenth century were able to increase industrial output
and capacity without facing correspondingly increased costs
due to a rise in the real wage-rate meant that the reward for
successful innovation was largely shared between the investor
and the consumer. This greatly increased the incentive to
industrialize. Profits rose and prices fell. To the extent that
profits rose, investors were encouraged to plough back a high
proportion of their earnings into further investment and so to
increase output and opportunities for employment still more.
As prices fell demand rose, and, since the demand for manu-
factures tended to be elastic, total expenditure grew in spite of
the price fall, and by widening the market stimulated further
investment and further demand for labour. The process was
cumulative. Increased investment raised the rate of technical
progress, by increasing the extent to which producers were
adopting the newer machinery and the newer techniques, and
this in its turn meant more output for less input of either capital
or labour. Thus abundant cheap labour promoted new
investment and so maintained technical progress which, by
economizing in both capital and labour, generated a cumulative
self-reinforcing expansion in economic activity.
Although not all producers found it easy to get all the labour
they needed in the second half of the eighteenth century, there
is no doubt that the labour force was far from fully employed
and that it was growing at a faster rate than ever before. After
stagnating in the early decades of the century the population
of England and Wales began growing at a rate of 3^ per cent
per decade in the 1740's and had reached it peak rate of increase
of nearly 17 per cent per decade in 1811-21. It was still about
16 per cent in the following decade; and for the rest of the
nineteenth century the decade rate of increase continued to be
above 11 per cent, though it never again rose above 14 per cent.1
At the height of the industrial revolution the population was
growing at a rate of about 1 per cent per annum. This was slow
compared with the explosive rates of population growth
characteristic of some of today's developing countries, but it was
nevertheless appreciably above any previous experience in
Britain.
Because in its early stages the increasing population was
largely due to the combined effects of a falling infantile death
rate and a rising birth rate, the increment was largely composed
of infants. Consequently until 1821 or thereabouts the active
labour force was growing a little more slowly than the total
population. On the other hand, it did not take long for
eighteenth-century babies to grow up to the stage at which they
could be made to earn at least part of their own keep. Domestic
industry found work for children almost as soon as they could
crawl and the early textile factories were taking batches of
pauper children from the age of five upwards. Moreover the
continued high rate of infantile mortality meant that the
average size of family did not increase to a very marked extent.
Thus the burden of dependants so often created by a growing
population tended to fall less heavily on the British economy of
the late eighteenth century than it does on today's developing
countries with their more humane standards set by international
example and with their large surviving families of young
children. Although the community's conscience became more
tender as the nineteenth century wore on, and although Factory
Acts and factory inspectors and national schools began to get
the children out of the factories, child labour continued in some
1
See Deane and Cole, British Economic Growth, p. 288, for rates of population increase
in England and Wales, Great Britain and United Kingdom where available.
I46 THE FIRST INDUSTRIAL REVOLUTION
form or another for more than a century after the industrial
revolution began. Even as late as 1871 the Medical Officer of
Health for the Local Government Board reported finding a
child of three making lucifer matches in Bethnal Green.
Another factor which helped to increase the input of labour
into the productive process was the increase in the average
number of hours worked per worker and per day. It was of
course particularly conspicuous in the factories as compared
with domestic industry. The factories used full-time labour
which stayed at the machines as long as the machines were
turning, which was as long as there was a demand for their
products. While they depended on water-power there were
seasonal interruptions in their operations, but when steam-
power was introduced, and still more when gas was employed
to light the factories day and night, only trade depression
stopped them. Men, women and children worked 12-16 hours
per day or per night in continuous shifts. Whether the input of
labour wrung from children working a daily 15 or 16 hours in
temperatures of 8o° and above was more productive than, say,
11 or 12 hours worked in more humane conditions in one of the
better-run factories is questionable. There must have been a
point beyond which the extra time worked gave negative rather
than positive returns even in the unskilled operations of child
labour. Nevertheless there is no doubt that as more people
abandoned the kind of domestic industry which was an off-
season activity of agriculturalists and went into full-time manu-
facturing in factory and workshop, the effective input of labour
per member of the labour force rose. Nor was it only in
manufacturing industry that labour input increased. As yields
per acre rose, as farmers turned land from fallow to labour-
intensive root crops, and as animal husbandry became more
sophisticated, the average agricultural labourer of the late
eighteenth century found himself spending more hours of each
day and more days of each year in active gainful employment
than his predecessors had done.
It used to be argued that the process of enclosures, by drawing
smallholders and cottagers off the land and depopulating the
rural areas, created the large proletarian labour force which
made the industrial revolution possible. This is the view which
was romanticized in Oliver Goldsmith's poem The Deserted
Village and, much later, was given political point by Karl Marx.
THE ROLE OF LABOUR I47
But it seems to have been a grossly oversimplified view of what

happened.1 That the enclosure movement helped to destroy
some of the traditional rigidities in the agricultural labour force
and also, by taking away rights of common, to drive out the few
remaining self-subsistence cottagers seems plausible enough.
What is not confirmed by the evidence, however, is that there
was an immediate connection between enclosure and the
movement of the labour force from agriculture to industry. The
true exodus from the land did not develop until the second half
of the nineteenth century, and although there was some growth
in the numbers of the rural proletariat in the course of the
industrial revolution it was not so sudden and radical a
transformation as was traditionally supposed. Clapham, com-
paring the results of the 1831 census with Gregory King's table
of families, concluded that by the later date there were still only
about 2 rural proletarian families to each rural occupying
family, compared with a ratio of about if to 1 a hundred and
forty years before.2
The fact is that the complex process of economic change and
growth that we call the industrial revolution—whether it
concerned agriculture or transport or trade or manufacturing—
was a process which called for a massive increase in the input
of labour and itself provided part of the occasion for that
increase. The factories gave full-time gainful employment not
only to men but also to women and children, groups which had
rarely enjoyed more than seasonal or part-time work for pay
in the domestic industry era. It would be wrong to exaggerate
the new opportunities. Only a small percentage of the com-
munity had access to factory employment, and there were many
would-be part-time workers whose incomes from manufacturing
had been taken from them by the factory operators. But there
seems very little doubt that on balance both the range and the
number of economic opportunities were enlarged whenever
output grew appreciably faster than the costs of producing that
output—in other words whenever technical progress gathered
appreciable momentum.
That the labour became available to satisfy the new demands
can be judged from the relative stability of wages. Special
1
See J. D. Chambers, 'Enclosure and Labour Supply in the Industrial Revolution',
Economic History Review, vol. v, no. 3 (1953).
2
C l a p h a m , Economic History, vol. 1, p . 114.
categories of workers—like weavers in the early years when the

spinning-mills turned out more cheap yarn than there were
hands to process it, or like engineers when the demand for
machinery soared—earned boom wages at times. But for the
mass of the employed population there was little evidence of a
marked or sustained improvement in daily wage-rates over the
period 1780-1830, once allowance had been made for rising
food prices during the war years. This in itself is a remarkable
fact, and it has sometimes been claimed that the elastic labour
supply which it reflects constituted one of the main reasons for
the enormous and unprecedented expansion of the British
economy over this period. In a famous footnote, for example,
Professor Hicks suggests that 'the whole Industrial Revolution
of the last 200 years has been nothing else but a vast secular
boom, largely induced by the unparalleled rise in population'. 1
To say that abundant cheap labour was a crucial factor in
maintaining the impetus of the British industrial revolution does
not, however, amount to advocating a low-wage economy of the
kind favoured by the mercantilists of the seventeenth and
eighteenth centuries. This was an argument which went out of
favour as industrialization progressed. Mandeville, for example,
asserted in 1705 in his Fable of the Bees that' in a free nation where
slaves are not allowed of, the surest wealth consists in a
multitude of laborious poor \ 2 Arthur Young put the point more
trenchantly in 1771: 'Everyone but an idiot knows that the
lowest classes must be kept poor or they will never be
industrious.' 3 A more sophisticated view of economic develop-
ment, with a curiously modern ring about it, was put forward
by Sir James Stewart in his Principles of Political Economy
published in 1769. Stewart recognized that high wages meant
high consumer purchasing power, which stimulated demand
and hence output, but he saw rising wages as a limiting factor
to the expansion of the export sector. In the absence of
continuing technical progress, he argued, rising wages would
eventually check national economic growth by raising domestic
prices above those of foreign competitors and thus by reducing
the market for exports.4
1
J . R. Hicks, Value and Capital (1946), p. 302.
2
Quoted by E. Hecksher, Mercantilism, vol. 11 (1955), p. 164.
3
A. Young, Farmer's Tour through the East of England, vol iv (1771), p. 361.
4
Quoted by A. W. Coats, ' C h a n g i n g Attitudes of L a b o u r in the mid-Eighteenth
C e n t u r y ' , Economic History Review (August 1958), p. 50.
THEROLEOFLABOUR 149
Adam Smith took a more optimistic view. In his Wealth of

Nations, originally published in 1776, he pointed out that on the
one hand poverty resulted in a high child death rate and hence
reduced the supply of labour: and that on the other hand high
wages provided the labourer with incentives to work harder.
'The liberal reward of labour', he wrote, 'as it encourages the
propagation, so it increases the industry of the common
people.. .Where wages are high accordingly, we shall always
find the workmen more active, diligent, and expeditious than
where they are low; in England, for example, than in Scotland;
in the neighbourhood of great towns, than in remote country
places'.1
Significantly, too, Adam Smith dealt quite specifically with
the theory of the 'backward sloping supply curve' for labour,
which is often used today as an explanation for the behaviour
of the labour force of some of the modern pre-industrial regions
of the world. Briefly, this theory says that the labour force
behaves quite differently in certain economically backward
areas than we should expect. Instead of being ready to offer
more labour for higher wages—in which case the supply curve
would slope 'normally' (i.e. it would rise from left to right)—it
does the opposite. The reason is that workers in these areas have
a limited demand for money income; and since a higher wage
enables the workman to reach his target-income in less time
than before, he works fewer days in the week. While Adam
Smith admitted the existence of this attitude he denied that it
applies to the majority of workers. 'Some workmen indeed,
when they can earn in four days what will maintain them
through the week will be idle the other three. This, however, is
by no means the case with the greater part. '2
The interesting thing about Adam Smith's interpretation is
that it marks a transitional stage in English economic experience.
A target-income is the goal of an economically static community,
and the English economy was already growing markedly both
in average incomes and in numbers of inhabitants by the 1770's.
The transformation which we have come to call the industrial
revolution had already begun to take shape and the pre-
industrial labour force, with its basically self-subsistence form
of organization, was rapidly disappearing in favour of a pro-
1 2
Adam Smith, Wealth of Nations, vol. i, p. 83. Ibid. p. 83.
letarian labour force with a rising appetite for domestic manu-

factures and for such imported luxuries as sugar, tea and
tobacco. The cottager was being forced by enclosure into the
position of a landless agricultural labourer. The domestic
industrial worker was becoming more and more dependent on
the capitalist merchant to supply him with raw materials and
to market the finished product. The English economy was
becoming more specialized and hence more independent, and
the uses to which the working man could put his cash income
were becoming more urgent and more various. In these circum-
stances a backward-sloping supply curve for labour was
hardly likely to illustrate the general case.
To say that English labour was relatively 'cheap' at the end
of the eighteenth century does not imply that it was relatively
poor either in relation to labour in other countries or to past
experience in Britain. English wages were generally agreed to
be lower than American wages, for in North America labour
was scarce and land plentiful, and the fact that the potential
employee always had the choice of becoming an independent
land-owning farmer kept wages higher than they would
otherwise have been. On the other hand, English wages were
certainly above French wages. When Arthur Young travelled
in France in the 1780's, and observed the comparatively low
level of wages which prevailed there, he was no longer so
convinced as he had been when travelling in eastern England
in the 1760's of the virtues of a low-wage economy.1 'The vast
superiority of the English manufactures, taken in the gross, to
those of France united with this higher price of labour', he wrote
in 1789, 'is a subject of great political curiosity and importance,
for it shows clearly, that it is not the nominal cheapness of labour
that favours manufactures, which flourish most where labour
is nominally the dearest. Perhaps', he went on, 'they flourish
on this account, since labour is generally in reality the cheapest
where it is nominally the dearest; the quality of the work, the skill
and dexterity of performance. . . must, on an average, depend
very much on the state of ease in which the workman lives. If
he be well nourished and clothed and his constitution kept in
a state of vigour and activity he will perform his work incom-
parably better than a man whose poverty allows but a scanty
nourishment.' 2
1 2
Young, Travels in France, ed. Maxwell, p. 315. Ibid. p. 311.
Nor indeed was English labour evidently poorer than it had

been in earlier decades. It was a widespread contemporary
belief that there was an appreciable improvement in the real
earnings of the labouring classes in the first three-quarters of the
nineteenth century. Phelps Brown's estimate of the purchasing
power of a building-craftsman's wages suggests that by the
1780's it was 15 per cent above what it has been in the 1680's:
and that although it fell back during the war years it was 12
per cent above the level of the 1780's by the 1820's and nearly
20 per cent above by the 1830's. In 1688 Gregory King
estimated that £622,000 was received by families below the
poverty line to supplement their incomes, and this transfer
amounted to rather less than 1 j per cent of the national income
of England and Wales. By 1800 expenditure on poor relief
amounted to about 2 per cent of national income, but this went
to support a much more liberal relief policy. The notorious
Speenhamland system, inaugurated by a decision of the Berk-
shire magistrates in 1795, and ratified by Parliament in the
following year, authorized outdoor relief in all parishes and
drew up a scale of public assistance related to changes in the
price of bread; this augmented wages with parish relief in
proportion to the number of mouths to be fed.
The fact was that by becoming more dependent on the return
from specific employments instead of being able to rely on
several possible sources of income—earnings from domestic
industry, food from cottage plot or commons pasture, as well
as wages from various casual employments—the labourer
became a great deal more vulnerable to harvest crises and trade
depressions than he had been in the past. Given that both kinds
of unforeseen disaster were frequent in the climatically
unfavourable and war-torn years of the late eighteenth and
early nineteenth centuries, it is difficult to see how the country
could have avoided social and political upheaval without a
fairly liberal policy of poor-relief. Nevertheless the traditional
interpretation, stemming almost undiluted from the Poor Law
Commissioners' Report of 1834, has been that the Speenham-
land System was 'a bounty on indolence and vice' and a
'universal system of pauperism'. 1 Wages were permitted to sink
1
For example, Mantoux, The Industrial Revolution in the Eighteenth Century, asserts that
'relief given to destitution was becoming a premium on improvidence and laziness'
(p. 449).
below the subsistence minimum because the employer could

rely on the parish to make up the difference. It was even argued
that the system, being a 'bounty on bastardy' and an
incentive to early marriage, was one of the causes of the
increasing population. This view goes back to Malthus:
'Among the lower classes of society, where the point is of the
greatest importance, the poor-laws afford a direct, constant and
systematical encouragement to marriage, by removing from
each individual their heavy responsibility which he would
incur by the laws of nature, for bringing beings into the world
which he could not support.' 1
Recent research and analysis has tended to modify this view
of the disastrous and far-reaching consequences of the old Poor
Law, and even to throw some doubt on the extent of the
change brought about by the 1834 Act.2 For one thing, the
Speenhamland System was by no means universal. It did not
extend to industrial areas, where relief came in the form of
unemployment assistance rather than in family allowances
supplementing wages. Industrial wages were determined by the
state of trade (which decided the demand for labour) and the
size of the labour reserve in the industrial areas (which decided
its supply) rather than by any consideration of the subsistence
minimum permitted by access to poor relief. Malthus knew this
well enough and attributed the surplus of labour in the towns
to overflow from rural areas rendered fertile by the Poor Laws.
But this argument depends on the assumption that in the rural
areas the chain of cause and effect ran from high poor-relief
payments to large families rather than the other way round.
This is an unwarranted assumption. Not all the English parishes
operated the Speenhamland system, even when it was at its
height, and there is no evidence that population in the Speen-
hamland counties, or indeed in Scotland and Ireland which
never adopted the system, grew any faster than the population
of the non-Speenhamland counties. Moreover the evidence
collected by the Poor Law Commissioners and published by
them in the appendix to their 1834 report suggests that the
system had almost disappeared by then, even in the south where
1
T. R. Malthus, An Essay in Population (originally published 1798), Everyman ed., vol.
11 (n.d.), p. 184.
2
See, for example, M. Blaug, 'The Myth of the old Poor Law and the Making of the
New', Journal of Economic History (June 1963), and idem, 'The Poor Law Report
Re-examined', ibid. June 1964.
it had been most prevalent. Only 11 per cent of the so-called

Speenhamland counties were then giving allowances in aid of
wages and only 7 per cent of the non-Speenhamland counties.1
It appears to have reached its height in the Napoleonic wars,
when it was a means of allaying dangerous discontent amongst
a growing rural proletariat faced by soaring food prices, and to
have died out in the post-war period, except in a few parishes.
If the Speenhamland System did influence the supply of
labour in the early nineteenth century it was more likely to have
been through its effect, when taken in conjunction with the
settlement laws, on the mobility of labour. For to be in elastic
supply it is not enough for the labour force to be numerous—it
must be available in the right quantities wherever it is required;
and here the laws of poor relief and settlement seem to have
positively hindered the free movement of labour. The old
settlement law of 1662 had set up barriers to migration by
enacting that all newcomers to a parish could be forcibly
removed to their last parish of settlement (at that parish's
expense) within 40 days of arrival if they were likely to become
a burden on the parish. In 1795 this law was relaxed by the Poor
Law Removal Act, which forbad the eviction of the poor until
they actually became chargeable and made the parish ordering
the move liable for the expense of the removal. Nevertheless a
lax parish-relief system and the risks of forcible ejection from a
new parish constituted a positive disincentive to migration on
the part of responsible labourers and their families. Cobbett, for
example, maintained that as soon as there was any serious trade
depression, the industrial centres expelled their unemployed
labourers by the coach-load to the parishes from which they had
come.2 Only imminent destitution would induce a labouring
family to leave their home parish when scenes like this were
being enacted. The consequence was that while agricultural
unemployment and under-employment were acute in the stag-
nating areas of the south and east, there were recurrent
scarcities of labour in the expanding industrial towns of the
north and west.
Had it not been for the high rate of natural increase in the
industrial areas of the north-west and midlands and in their
immediate hinterlands, indeed, it is doubtful whether the
1
Blaug, 'The Poor Law Report Re-examined'.
2
Gobbett, Political Register (14 May 1821).
T H E
process of industrialization could have developed as rapidly as

it did. For what happened was not that labour moved from the
south and east where it was redundant, to the north and west
where it was in demand, but that it drifted over comparatively
short distances from rural areas into the nearest industrial
centres. There was some relatively long-distance migration in
the 1830's when the new poor-law commissioners transferred
whole families under short-term contract from the southern
counties to Lancashire, but for the most part migration was local
in character. An examination of the 1851 census reveals that
most of the immigrants to Liverpool, Manchester and Bolton,
for example, came from Lancashire, Cheshire or Ireland, and
most of the migrants to Leeds, Sheffield and Bradford from
Yorkshire.1
The migration from Ireland was particularly significant.
Ireland had at least as high a rate of population increase as
England in the late eighteenth and early nineteenth centuries
(though it was based more on the immense food productivity
of the potato than on economic progress in any broader sense
of the term): and Ireland had no system of poor-law relief. So
when the recurrent harvest crises struck, the destitute Irish had
no alternative but to starve or to migrate. Many of them
migrated to Glasgow and Lancashire and swelled the labour
reserve of textile towns. As Irish domestic manufactures suc-
cumbed to the competition of the technologically superior British
products, Irish hand-loom weavers came in to swell the doomed
ranks of the English workers in face of the inexorable competition
of the power-loom. Later, when the catastrophic potato famines
of 1846-7 coincided with the English railway boom, the Irish
immigrants made it possible for an immense construction effort
to be completed within a relatively short period of time, without
starving the rest of the economy of labour. It was not only the
concurrence in Ireland of a rapidly growing labour force, a
stagnating domestic economy and no poor-law system that
made its labour so accessible to English manufacturers. It was
also a question of transport. The journey from Kent, say, to
Lancashire was expensive and lengthy at least until the second
half of the nineteenth century. By contrast, in the 1820's there
was a regular steamship service from Ireland which brought
1
A. Redford, Labour Migration in England, 1800-50 (1926), p. 158.
r
migrants at 2s. 6d. a head; at times—in 1827 f° example—the
single fare fell to \d. or $d. per head.
It was fortunate for British industrialists that the demographic
factors were operating in their favour throughout the crucial
period of the industrial revolution. It was fortunate for the
community that technical progress made them able to take
advantage of the demographic situation. Population, as we have
seen, began to grow without check in the 1740's, largely (though
by no means entirely) as a consequence of a fall in the death
rate, particularly the child death rate. Its growth accelerated
again in the 1780's as the birth rate, inflated by the larger
numbers surviving to child-bearing age, rose even faster: and
it went on to reach a peak rate of natural increase in the second
decade of the nineteenth century. The arrival of this flood of
young children could have seriously dragged down average
productivity for the nation as a whole had it not been that the
new developments in industry permitted a more complete use
of the labour supply. For one thing the new textile mills could
use thousands of pauper children and gave regular employment
opportunities to many women for whom the pre-industrial
economy offered little chance of gainful employment except on
a highly seasonal basis. The greatly expanded output of yarn,
moreover, made it possible to give more continuous employment
to adult male weavers whose looms had often lain idle for want
of yarn in the days when spinning was a laborious hand-process.
It must not be imagined, however, that the pioneers of the
industrial revolution found a factory labour force ready to
command. The transition from agricultural or domestic indu-
stries with their seasonal routine, their variable pace, and their
family-based organization, to the monotonous, machine-driven,
impersonal grind of factory work did not come easily to British
workers. The early water-driven factories, generally situated in
remote rural areas on the banks of streams, were constantly
short of labour. They could import hundreds of pauper children,
but for their adult labour force they had to depend largely on
a feckless, wandering reserve of migrants with a high rate of
turnover and little sense of discipline. The respectable settled
population regarded the factory as a kind of workhouse and
long-distance migration as a kind of transportation: and while
factory owners searched the workhouses for labour and invoked
the full weight of the law to tie their workers by long-term
contracts and to apprehend their runaways, this attitude was

understandable. To expand his labour force a mill-owner had to
provide housing and other services, to offer high wages and jobs
for women and children in order to attract whole families to a
rural backwater, and to keep most of them on his pay-roll, even
when trade was bad, if they were not to drift away to other areas.
The patriarchal factory villages built by men like Strutt and
Arkwright in the 1780's were
a deliberate creation, without assistance from the State or local
authority and with no public services. The factory, the weir, the dams,
the machine shop, the houses, the roads and bridges, the inn, the
truck-shop, the church and chapel, the manager's mansion—all were
devised by and grew up under the owner's eye. Most of the work was
done by direct labour, just as was the machine-building in the
mechanics' shop. The labour had to be attracted and held.1
This was not cheap labour, neither was it elastic in supply.
The use of steam-power, however, completely changed the
picture. When steam became the main motive power of the
spinning-mills it became preferable to build the new factories
in towns, where the reserve of labour was large in relation to
the requirements of the factories. There the industrialist could
usually rely on attracting most if not all of the labour force
justified by a trade boom without having to increase its price.
He could callously cast off labour when trade was slack without
any fear of losing it permanently. He could leave his workers
to crowd into the garrets and cellars of existing tenements and
rely on private building-contractors to adjust the supply of
housing accommodation to the demand for it by running up
jerry-built houses to be let off at exorbitant rents. As industry
became more urbanized, the paternalism that had characterized
the water-power factories gave way to a more impersonal system
of labour recruitment. The labour force of the individual factory
became merged into a general labour force which could move
easily from one employer to another and for which no particular
employer need feel any special responsibility. From this second
phase of the factory age emerged the true industrial proletariat,
numerous, capable of united action because it was concentrated,
increasingly conscious of its political grievances, and working
1
R. S. Fitton and A. P. Wadsworth, The Strutts and the Arkwrights, 1758-1830 (1958),
p. 98.
in an environment which became steadily more unwholesome
as the towns grew and as the entrepreneur became less and less
involved in a personal relationship with his workers.
Through time the changes in the organization of production,
associated with the enlargement in the scale of operations and
dependence on expensive fixed capital equipment, entailed
radical changes in the role of the industrial labour force. In
particular, for example, it led to increased specialization of
labour—a specialization which had two dimensions. First there
was an increasing specialization by industry, or occupation,
which had the effect of narrowing the range of tasks performed
by the individual workman. This kind of division of labour had
already been identified by Adam Smith as a crucial source of
productivity growth. A worker who can spend all his time on
one or a few operations is likely to become more efficient both
because he does not have to waste time or energy switching from
one task to another, and because he develops in technical ability
by concentrating on a narrow range of operations. On the other
hand, the increase in his potential productivity may in practice
be partially offset by a change in his attitude to his daily work.
The narrower the range of operations which an individual is
obliged to perform the more monotonous his job is likely to be.
Of course not all highly specialized jobs are boring, but there
is no doubt that one effect of an increasing specialization of the
labour force was to increase the number of purely routine tasks
falling to the unskilled operators; and while there was abundant
labour the employer had no incentive to mechanize these
routine operations.
The other kind of specialization that stemmed from the
industrial revolution was the specialization as between labour
and capital involved in large-scale capitalist industry. It also
entailed changes in the labourer's attitude to his work for it
changed the basic terms on which the average individual earned
his living. In a traditional, pre-industrial economy where the
characteristic unit of production is the self-subsistent family,
dependent for its livelihood on its own joint output, no clear
distinction exists between the economic and social role of labour
as a factor of production. The relationship of the worker to
the unit's decision-taker is the relationship of a member of
family to a head of family, and the rights and obligations of
the worker—even the nature of his economic return—are
determined by social as much as by economic factors. Above
the pure subsistence level when some specialization of activity
as between families is possible, economic relationships become
more complex. Feudal society, for example, was a response to
the needs for defence raised by tribal conflict and developed a
division of labour between fighters and workers in which
economic ties were subordinated to the demands of a military
hierarchy. Since trade and exchange had not yet developed
sufficiently at that stage to permit economic and military
obligations to be matched in monetary terms, feudal society
established its economic nexus in the form of a system of
remuneration and taxation based on land.
As agricultural productivity grew and trade expanded, how-
ever, it was possible to extend the division of labour and to
distinguish between the cultivators of the soil on the one hand
and the merchants on the other. The enlargement of the money
economy which development of trade involved means that there
was a steadily increasing area of human relationships over
which the cash nexus was of primary importance. But the
typical unit of production was still the family, most heads of
families were self-employed and relatively few individuals were
employed for wages; most of those who were wage earners lived
as members of the family group for which they worked.
When Gregory King drew up his table of incomes entering
into English national income at the end of the seventeenth
century, he classified them by families for this was the natural
thing to do, though by this time he could allocate the families
to a number of distinct occupational groups, showing that some
division of labour had already developed.1 Besides the soldiers
and the sailors and the farmers, for example, he distinguished
merchants, shopkeepers, artisans, clergymen, civil servants,
lawyers and other professional persons. Subsistence producers
seem to have become a rather small sector but pure wage-earners,
i.e. people whose incomes came largely through employment in
the service of families not their own were still in a minority. If
we add together King's figures for labouring people and
out-servants with common soldiers and sailors, we find ourselves
with a total amounting to rather less than a third of the
estimated number of families in England and Wales. Of the rest,
even the civil servants and the officers in the army and navy
1
See above, pp. 6-7.
were much more like self-employed persons than employees, for

government offices and military or naval commissions were
properties that were bought and sold: while clergymen too had
'livings' which were also more in the nature of properties than
employments.
The system of production that developed in the course of the
industrial revolution, however, divided producers into two
main classes—in one of which were the owners (or hirers) of the
nation's capital assets, viz. the entrepreneurs taking the decisions
about what was to be produced and at what price, and in the
other of which were the operatives by whose labour the goods
were produced. The basic distinction between capitalist and
worker, between employer and employee, is marked by the
character of the return which each gets for his contribution to
production under this system. The capitalists receive profits, i.e.
a return determined by the relationship between prices, output
and costs. The labourers receive wages and salaries—contractual
payments settled by a process of bargaining with the employer.
Of course it is possible—even in a fully industrialized economy
—for one individual to figure in both classes—for a self-
employed man to labour on his own account, or for an
individual to get an income from employment as well as a profit
from investment, i.e. from owning capital. But the distinction
between employer and employee is fundamental to a capitalist
industrialized economy and most producers would fall clearly
into one category or the other.
This change in the social and economic role of labour in the
productive process was one of the most radical of the changes
involved in the industrial revolution. For the attitudes to work
and leisure which characterize the self-employed individual or
the family worker are very different to those motivating a
worker who is a mere wage slave and gets none of the profits
of his activity. 'So long as industry was carried on mainly by
small masters, each employing but one or two journeymen, the
period of any energetic man's service as a hired wage earner
cannot normally have exceeded a few years, and the industrious
apprentice might reasonably hope, if not always to marry his
master's daughter, at least to set up in business for himself.'1
In these conditions of work the journeyman labourer was apt
1
S. and B. Webb, History of Trade Unionism (1920), p. 6.
l6o THE FIRST INDUSTRIAL REVOLUTION
to look at things through the same kind of spectacles as his
employer and there was generally no basic division of interest
between employer and employee.
As the size of the proletarian labour force grew, however, the
interests of the worker seemed increasingly to diverge from that
of his master, and he began accordingly to form associations
with other workers in the same trade with whom he felt some
community of interest. These associations constituted the origins
of trade unions. They were not—as some historians have
argued—a direct descendant of the medieval craft guilds, but
were a response to the new conditions of work involved in an
industrializing economy. Until the eighteenth century there was
little evidence for the existence of trade unions in the sense of
continuous associations of wage earners for maintaining or
improving their working conditions, but from about the middle
of the century the Journals of the House of Commons record
an increasing number of complaints against each other by
employers and journeymen's associations. Trade clubs or unions
thus tended to appear wherever the bulk of the labour force had
ceased to be independent producers.
It was the skilled craftsmen who set up most of the lasting
associations of working-class men over the period 1750-1850.
They combined for a variety of reasons—to protect themselves
against industrial exploitation, to maintain their customary
living standards and differentials, to exploit the scarcity-value
of their skills and to provide some sort of mutual unemployment
and sickness insurance. Their strength lay in the diversity of
their objectives. Though the industrial aims of the trade clubs
were illegal through the first quarter of the nineteenth century,
their functions as friendly societies providing their members
with benefits against sickness, unemployment, old age and other
catastrophes fell into a socially respected tradition. In the event,
it was scarcely possible to prevent a local benefit club from
organizing its members during a trade dispute, for no distinction
was made between strike pay or social benefits as uses for their
funds.
The unskilled workers had neither the funds nor the education
to set up continuing trade associations in defiance of the law.
But in the late eighteenth and early nineteenth centuries when
there was no effective police force, they were by no means
helpless when roused. Their most effective weapon against an
oppressive employer was what has been called the 'collective
THE ROLE OF LABOUR l6l
bargaining riot'. Machine-breaking riots, which were a familiar

feature of the early stages of the industrial revolution, were often
directed as much against the other property of the employer—
raw materials, finished foods, buildings—as against machines.1
Although the military were always available for use against the
working class, local J.P.s would hesitate until they felt that law
and order in general was at risk before calling in the soldiers,
whose depredations might be worse than those of the rioters and
who might not arrive until after the wrecking was over. A body
of disgruntled workers, their faces blackened for disguise, could
often do enough damage to coerce an oppressive employer
before military aid could be summoned. When the Luddite riots
of 1812 were at their height, they pinned down a military force
larger than that taken by the Duke of Wellington to Portugal
to fight the Peninsular War.
In view of the evident ease with which a rioting mob could
hold a local community to ransom, it is hardly surprising that,
faced with the example of the French Revolution across the
Channel, Parliament passed the Combination Laws of 1799
and 1800 comprehensively prohibiting all combinations of
employers or employees. The novelty of these laws was that
they provided for summary trial and conviction and hence gave
determined employers a means of acting instantly against
individual workers who were threatening collective action. The
new laws were ineffective against the employers and they did
not kill the trade clubs, merely made them more secretive and
cunning in their behaviour. A Select Committe of the House
of Commons which reported in 1824 o n t n e operation of the
Combination Laws concluded t h a t ' the laws have not only not
been efficient to prevent combinations either of masters or
workmen, but on the contrary have in the opinion of many of
both parties had a tendency to produce mutual irritation and
distrust and give violent character to the combinations and to
render them highly dangerous to the peace of the community'. 2
The Committee also went on to advocate that 'masters and
workmen should be freed from such restrictions as regards the
rate of wages and hours of working, and be left at perfect
liberty to make such agreements as they eventually think
proper'.
The Select Committee's advocacy of a system of free collective
1
E. Hobsbawm, 'The Machine-Breakers', Past and Present (1952).
2
H. Pelling, History of British Trade Unionism, p. 30.
bargaining was more in tune with the doctrines of classical
political economy than with earlier views of the relationship
between employer and employee. Most of the early factory
owners accepted a paternalistic role vis-a-vis their wage force
and the workers expected to receive a fair day's pay for a fair
day's work—looking to the J.P.s to arbitrate when there was
a dispute as to what was 'fair' in a particular instance. As
industry became more urbanized, however, the separate work
force attached to particular factories merged into a general
labour force for which no single employer felt personally
responsible. The profit-maximizing criteria for entrepreneurial
behaviour advocated by the new political economy, fathered by
Adam Smith, involved a deliberate de-personalization of the
wage bargain and members of the industrial workforce were
more and more exposed to the chill winds of competition against
which they were ill-equipped to defend themselves.
It had become clear by the 1820's and 1830's, even to workers
who clung to the traditional ethic of fair wages and just prices
that the old system in which they had rights as well as duties
was disintegrating. What they did not see at all clearly was what
steps they could take in their own defence. Some felt that the
solution lay in political reform and that a democratically elected
government would establish rules that could benefit both
worker and employer. Hence the strong working class support
for constitutional reform which, when disappointed by the 1832
Reform Act, generated the steam for the Chartist movement.
Others, under the inspiration of idealists, such as Robert Owen,
or revolutionaries such as the socialists, thought in terms of a
brave new world in which moral imperatives would prevail and
the labourer get a just reward for his toil.
The fact is, however, that even after the Combination Laws
were repealed in 1824/5 the labour force had not yet assumed
a form which would enable it to exert enough industrial power
to affect the worker's share of the wage bargain. Until at least
the middle of the nineteenth century, the typical industrial
worker was engaged in a small workshop, or as an unskilled
labourer in more or less casual employment on the streets,
building sites or docks. There was a great deal of sub-contracting
through skilled workers who were employers and employees at
the same time. Even in factory trades, such as textiles, there were
until the 1840's more people engaged as outworkers in their own
homes than there were minding machines on the factory floor;
and among the factory operatives was a high proportion of
women, juveniles and children—none of them groups that were
easily organized in a trade dispute.
That the working class was still too heterogeneous a body to
unite in a common cause was demonstrated when the Grand
National Consolidated Trades Union was set up in 1834 (under
Robert Owen's inspiration) to organize strikes and initiate
cooperative stores and manufacturing enterprises. Within a few
weeks a large number of trade unionists—variously estimated
as between half a million and a million—were enrolled as
members of the G.N.C.T.U., though it is doubtful whether more
than a few thousand rendered any dues to headquarters.
Government and employers were alarmed by the apparent
strength and militance of the movement. In March 1834, the
authorities reacted sharply by charging six Tolpuddle labourers
(who had been guilty of nothing more than organizing the
traditional trade club ritual) with administering unlawful oaths
for seditious purposes and turned them into martyrs of the trade
union movement by sentencing them to seven years transpor-
tation. Employers acted even more effectively by organizing a
series of lockouts and by forcing their workers, as a condition
of employment, to sign a document promising never the
threaten strike action. The G.N.C.T.U. collapsed before the end
of the year, its tiny resources exhausted by demands for strike
pay, and most of its constituent unions subsequently disinte-
grated under the employers' loosely organized but devastating
counter-attack. Even skilled labourers who were capable of
organizing themselves into permanent unions, and who had
some degree of monopoly in their skills to use as a bargaining
weapon, had not yet learned to exploit their potential industrial
strength. They showed themselves more concerned to maintain
a 'just' wage by customary criteria and to prevent dilution of
their ranks which might endanger employment levels, than to
seek higher wages by collective bargaining.
While the capitalist-entrepreneur was able so completely to
dominate the terms of the wage bargain, the scope for profitable
investment must have seemed limited only by the extent of the
market and the cost-reducing opportunities opened up by
technological progress. It is doubtful whether the transformation
of the British economy to an industry state could have proceeded
as rapidly and as fully without this special stimulus to invest-

ment. It is at any rate significant that when, towards the end
of the nineteenth century, the labour force began to expand
appreciably less rapidly, and when the demand for labour
became less homogeneous with the growth of the precision and
science-based trades, this coincided with a marked deceleration
in the British rate of growth.
CHAPTER IO
THE ROLE OF CAPITAL
The other factor of production whose development was crucial

to the British industrial revolution was capital. The reason why
the citizen of an industrialized country enjoys a higher standard
of living than his counterpart in a pre-industrial country is that
he produces more goods and services for each hour of effort; and
one of the reasons why he can do this is that he typically has
the advantage of a larger stock of capital to assist him in his
productive activities. The community in which he lives possesses
more mechanical equipment, more miles of road or railway or
canal, more ships and vehicles, more buildings and more
altogether of the kind of goods that are used to produce other
goods. He can expect to enjoy a rising standard of living because
he, or some of his fellow citizens, have formed the habit of setting
aside from current consumption enough to add to the
community's stock of producers' goods. There is enough annual
saving, that is to say, not only to replace the capital equipment
which wears out in the process of production but also to acquire
additional items.
To say that a pre-industrial country has a smaller stock of
capital than an industrialized country is not to say that it
necessarily has a lower level of capital per unit of output than
a more advanced economy. Indeed because it has inadequate
transport or credit or storage facilities, for example, or because
it makes intermittent or unproductive use of its existing capital
resources, it may be quite highly capitalized in relation to its
level of output: or in other words it may have quite a high
average capital-output ratio. What is certain is that it requires
a substantial addition to its existing stock of capital if it is to
industrialize, and that it will have to go on adding to its stock
if its workers are to go on raising their levels of product per head
and hence their levels of living.
Achieving this increase in its capital stock, and maintaining
.65
the increase, involves a community in some quite radical

changes in its mode of economic behaviour. The net effect of
these changes has often been dramatized by expressing it as a
sharp rise in the percentage of national income saved and
invested annually. Thus Professor W. A. Lewis has suggested
that a significant difference between an underdeveloped and a
developed country is that the former normally saves 6 per cent
of its national income and the latter 12 per cent or more; and
Professor Rostow has made a change in the national rate of
investment from about 5 per cent of national income to about
10 per cent a condition of the 'take-off into sustained growth'. 1
If there were statistics of national income and investment
covering the period of the Industrial Revolution we could say
when the change in the rate of investment took place for this
country. Unfortunately these statistics do not exist. Gregory
King's calculations made in the late seventeenth century
suggest that the nation was then investing about 5 per cent of
its total income: and estimates of national income and invest-
ment for the nineteenth century indicate that a rate of invest-
ment of about 10 per cent per annum had been achieved by the
late 1850's.2 What the statistics do not throw any light on is the
timing of the shift in relation to the Industrial Revolution. To
understand this it is necessary to ask ourselves what were the
underlying changes in the character of the capital stock and
when they took effect. For it is evident that the process of
industrialization involved significant changes not only in the
volume of capital accumulation but in its content.
First of all, then, what additions were made to the nation's
capital in the eighteenth century? Some of the relevant evidence
has been discussed already in earlier chapters. It is clear, for
example, that the enclosure movement was associated with new
investment in hedging, ditching, drainage and generally in the
sort of works required to bring commons and waste into
permanent cultivation. Urbanization involved investment in
buildings, street paving and lighting, water supply and sani-
tation. Improvements in communications entailed substantial
capital expenditure on roads, bridges, river navigations and
canals. These developments were taking place throughout the
1
W. A. Lewis, Theory of Economic Growth (1955), p. 225, and Rostow, Stages of Economic
Growth, p. 41.
Based on estimates for 1856/9 made by C. H. Feinstein, National Income, Expenditure
and Output of the United Kingdom, 1855-1^5 (1972), and A. H. Imlah, Economic
Elements in the Pax Britannica (1958).
THE ROLE OF CAPITAL 167
century though more intensively in the second half than in the

first, and there was a marked acceleration over the last three
decades in the pace of enclosures, of urbanization and of canal
building. There was also a notable acceleration of investment
towards the end of the century in those industries or sections
of industries that were affected by technical change, particularly
in the cotton and iron industries and in mining.
But if the national capital grew faster in the second half of
the eighteenth century than ever before, so too did the national
income and the population. The population of England and
Wales increased by roughly 50 per cent between 1751 and 1801:
the volume of overseas trade almost trebled: the real national
income probably doubled. Hence the level of investment would
have had to increase by something like 50 per cent just to keep
the capital stock growing at the same rate as the labour force:
it would have had to have more than doubled to have raised
the rate of investment as a percentage of the national income.
Recent research has generated various estimates of the rate
of British capital formation during the period of the industrial
revolution—not surprisingly in view of the paucity of primary
data and the inevitably tentative nature of both national income
and investment calculations.1 These researches leave no doubt
that new investment was expanding faster than population and
that the stock of fixed capital per member of the labour force
was significantly larger in 1830 than in 1800 and also larger in
1800 than in 1770. But there is, as yet, no convincing support
for the hypothesis that there was a disproportionate increase in
the savings or investment component of national income or
expenditure large enough to double the overall rate of investment
within the period 1750-1850. On the other hand, the compo-
sition of the nation's stock of capital was changing markedly.
Let us consider, for example, what the national capital
consisted of at the beginning of the nineteenth century. The first
thing to notice is that more than half of the nation's capital
seems to have been tied up in land. This is what the contem-
porary estimates indicate. The Reverend Henry Beeke made a
calculation of the national capital for the closing years of the
eighteenth century—around 1798—9—which suggested a
1
See especially Francois Crouzet (ed.) Capital Formation in the Industrial Revolution for
articles bearing on this theme. For the best recent estimates of capital growth in
Britain over the period of the industrial revolution, see C. H. Feinstein, 'Capital
Formation in Britain' in Cambridge Economic History of Europe, Vol. vn, ed. P. Mathias
and M. M. Postan
proportion of 55 per cent attributable to land; an estimate made

by Patrick Colquhoun for 1812 or thereabouts suggested a
closely similar proportion, 54 per cent; and in the 1830's Pebrer
calculated for 1832-3 that again about 54 per cent of the
national capital was in the value of its land.1 The figures on
which these proportions are based are no more than guesses, but
they are guesses made by well-informed observers, they are
mutually consistent and they justify the view that the bulk of
the nation's capital consisted of the value of its land.
Even if we exclude land and confine our attention to
reproducible or man-made capital, less than half of the total
consisted of industrial, commercial and financial capital (such
as stock-in-trade, machinery, canals and foreign assets); build-
ing and public property accounted for about a third, and
farmers' capital for nearly a fifth at the beginning of the
nineteenth century. By the 1830's industrialists may have been
ploughing back profits at a greater rate and some farmers may
have been putting more savings into fertilizers, improved
breeding stock and farm machinery, than into enclosure of
commons and waste. But the broad structure of the national
product looked much the same to Pebrer as it had done to Beeke
three or four decades previously.
After the railway age, however, a very different picture
emerges. Judging from Giffen's estimates of the national capital,
land still represented nearly a third of the value of total national
capital but it was declining rapidly in relative importance and
by 1885 accounted for less than a fifth of the total. Farm capital
was also relatively less important by the 1860's, and by the
fourth quarter of the nineteenth century when the great flight
from the land was in process, farm capital was apparently
falling in absolute value as well as in proportion to the national
total. By 1865 the reproducible or man-made capital of the
nation is estimated to have reached an aggregate value of about
four and a half times the national income compared with not
much more than three times the national income when Pebrer
was making his estimates in the early 1830's.
In sum, therefore, the evidence suggests that if there was a
sharp increase in the British rate of investment as a result of the
process of industrialization, it took place in the middle decades
1
The contemporary estimates are discussed in detail in Deane and Cole, British
Economic Growth, pp. 270-7.
of the nineteenth century. Much of it was attributable directly
or indirectly to the railways. The great railway boom reached
its peak in the late 1840's. But there were other sectors too in
which the process of capital accumulation was suddenly
accelerated in these middle decades of the century. The period
of greatest investment in the cotton industry seems to have
coincided with the widespread adoption of power-using mach-
inery. In the 15 years or so spanning the 1830's and early 1840's
the number of spindles practically doubled and the number of
power-looms quadrupled. It was the hand-loom weaver who
bore most of the burden of the industry's transformation to
power. In the 15 years when the cotton capitalists' profits
expanded at an unprecedented rate, the number of hand-looms
fell to a quarter of the number operating in the 1820's. By the
1850's the hand-loom weaver contributed a negligible propor-
tion of the industry's output of woven goods. For the other
textile industries the period of mechanization came somewhat
later than that of cotton. The worsted industry—which was
technically closer to cotton than the other branches of the
woollen industry—followed quite closely in its wake. For the rest
of the woollen industry the peak rate of mechanization took
place in the 1850's and 1860's. In the 1850's worsted factories
were developing power more rapidly than the cotton factories,
and in the 1860's the woollen factories proper were expanding
their rate of investment in power-looms more rapidly than the
other textile industries.
Investment in mines and in the iron industry seems to have
been closely allied to the railway construction boom. By the
1850's twenty-seven blast-furnaces a year were being built and
new fields of coal and iron ore were being rapidly opened up
in Scotland in the 1830's, in the Cleveland ore-field in the
1850's, and in the Cumberland-Lancashire field in the 1860's.
Investment in puddling furnaces also increased sharply in the
third quarter of the century. Between i860 and 1870—before
the big shift from malleable iron to steel—the number of
puddling furnaces practically doubled.
But, above all, these middle decades of the nineteenth century
were dominated by the massive developments in transport. It
was not only railways. The value of ships built in the United
Kingdom began to rise markedly in the late 1840's when iron
ships began to be built in increasing numbers. Between then and
the early 1860's the value of new construction more than

doubled. By the 1860's the annual value of shipping built and
registered in the U.K. exceeded one per cent of the national
income. This was probably its peak of relative importance,
though it was not until the 1870's that the new steamship
tonnages began to overtake the new sailing-ship tonnages.
Investment in ships involved sympathetic investment in docks
and harbours. The dock area of Liverpool was nearly doubled
in the second quarter of the nineteenth century. Of nearly £10
millions spent by government on British harbours during the
first three-quarters of the nineteenth century, about a half was
spent between 1850 and 1870.
It is important to notice, however, that evidence for an
upsurge in the rate of capital formation in the middle decades
of the nineteenth century relates entirely to increments in the
nation's stock of durable productive assets. This was one of the
characteristics which most sharply distinguished the industry
state of the late nineteenth century from the pre-industrial
economy of the early eighteenth century. At the heart of the
accelerated process of industrialization called the industrial
revolution was a marked shift in the composition of the nation's
productive capital which changed the nature of the investment
decision. The productive assets in which an early eighteenth
century entrepreneur—whether trader or manufacturer or
(more commonly) a mixture of both—had sunk his capital were
stocks of raw materials or semi-finished or finished goods on
their way to the consumer. When he started up in business what
he need capital for was to buy the basic stock-in-trade and to
pay the workforce processing or moving it. Machinery was
rarely needed. Even in the coal mines it was limited to the
occasional pumping engine. Outworkers usually owned their
own spinning wheels or handlooms or horses and carts as well
as their own tools and other implements. Most of the buildings
used in industry were primarily dwelling houses. According to
Professor Sir John Hicks: 'What happened in the Industrial
Revolution, the late eighteenth century Industrial Revolution,
is that the range of fixed capital goods that were used in
production, otherwise than in trade, began noticeably to
increase.'1 It did not happen suddenly. Even the early cotton-
spinners using powered machinery typically started up in an
1
Sir John Hicks, A Theory of Economic History (1969), pp. 142-3.
old barn or a warehouse or a cornmill or part of a dwelling
house. For the early textile factories, or breweries, for example,
it has been estimated that buildings and plant accounted for no
more than one-seventh or one-eighth of the total capital sunk
in the enterprise.1 Nevertheless, it was the changes in the scale,
range and variety of the fixed capital goods in which investment
was increasingly embodied that ultimately changed the system
of organization of productive activity for the British economy.
What it amounted to was that under the new system of
production most of the industrial capitalist's funds were tied up
in fixed capital assets rather than in circulating capital. The
advantage of circulating capital was that it was more liquid
and hence more mobile between uses. The eighteenth century
investor, or the entrepreneur, could move his capital between
trades and could enter or leave a given branch of industry at
fairly short notice, because he did not have to sink more than
a fraction of his available funds in expensive, industry-specific,
buildings, plant and equipment. He could, and frequently did,
operate in several branches of trade and manufacture simul-
taneously, or in rapid succession. Under the new system he was
increasingly forced to specialize and to take greater risks in
making his investment decisions. In an effort to reduce his own
share of the risks of a cyclical fall in demand he shifted as much
of it as he could on to his labour force. Hence the long drawn
out agony of the handloom weavers who bore most of the losses
of the early nineteenth century cotton trade slumps. Hence, also,
the development of a sharpening conflict of interest between
capital and labour.
The most impressive feature of the big leap forward in fixed
capital formation which characterized the middle decades of the
nineteenth century was the railway construction boom. This
was a spectacular episode. Railways themselves were not new.
What was new was the triumph of the steam-locomotive. For
the first quarter of the nineteenth century iron-railway con-
struction had been limited to small-scale localized railroads
operated by horse-power or by stationary engines. By the end
of 1825 there were between 300 and 400 miles of iron public
railroad in the United Kingdom, representing a total capital
investment of probably under £2 millions. The longest railway
was the Stockton-Darlington; at 25 miles it was the first to be
1
F. Crouzet (ed.), Capital Formation in the Industrial Revolution (1972).
designed for steam traction and for passenger traffic and its
opening can be regarded as the opening of the railway age. But
it still took nearly a decade for the steam-locomotive to be
assured of success. Horse-drawn coaches were used for passenger
traffic on the Stockton-Darlington line for some years, and even
as late as 1840 there were several public lines dependent entirely
on horse traction or on stationary engines. By then, however,
George Stephenson's Rapid had proved its worth and the
steam-locomotive ran on all the trunk lines so far built.
The construction of the railways proceeded in a series of
booms or manias. The first railway promotion mania coincided
with the boom of 1824-5 a n d resulted in just over 70 miles of
railway being opened to traffic over the following quinquen-
nium. The next worked up to a crescendo in 1836—7, and in the
seven years 1831-7 between 400 and 500 miles of railway were
opened to traffic. By the triennium 1838-40 expenditure on
construction and rolling-stock was running at an average of
more than £10 millions per annum, and by 1840 the value of
capital invested in railways was near £50 millions, most of
which represented the cost of the track and its installations.
Then there was a lull and a new mania. Between 1839 and 1843
no new railway lines, other than extensions to existing lines,
were opened, but between 1844 and 1847 more than 2,000 miles
were opened to traffic. The great railway construction peak was
in 1847 when more than a quarter of a million men were
employed in constructing 6,455 rniles of railways. Total railway
expenditure (including working expenses) was then running at
a level which was more than the declared value of British
exports and roughly a tenth of the total national income.
In effect the first mania in the 1820's reflected the experi-
mental beginnings. Then, once the success of the Liverpool and
Manchester line was clear, railway entrepreneurs threw all their
resources into the great main-line links between London and the
chief provincial centres and between the two principal industrial
areas—South Lancashire and West Yorkshire. The great trunk
lines of England (except the Great Northern) were laid down
in the mania of the 1830's. The great mania of the 1840's
'blocked out almost the whole railway system of modern
Britain'; 1 and by 1852 the only sizeable towns in England not
yet served by a railway were Hereford, Yeovil and Weymouth.
1
In the 1850's the railways reached out into the west and
south-western corners of England and into the north-east of
Scotland.
The early railways were not very different in concept or
purpose from the early coal railways. The Liverpool and
Manchester, for example, was a short line between an inland
industrial centre and its port, designed in the hope of generating
something new in the way of passenger traffic and of two-way
freight traffic. The hopes were justified and encouraged a
further innovation—the building of lines between London and
the chief urban centres of England. The innovators who created
the Grand Junction Line, the London and Birmingham, the
London and Southampton and the Great Western and others
were putting unprecedentedly large sums of money into an
enterprise whose prospects at that stage were highly speculative.
How were these large sums raised?
For the early railways, as for the canals, the bulk of the capital
came from local businessmen who had a special interest in the
success of the projected line. Bristol Corporation, for example,
took the initiative in promoting the Great Western Railway.
Gradually however their success made them ready to invest in
railway lines further afield. Liverpool businessmen for example
were well known for their readiness to invest in railways outside
their own area. Probably most of the capital for the early
railways was provided by merchants, many of whom had large
holdings in several companies. Nevertheless, the thing was
overdone. The manifest success of some of the railways attracted
savings from people who were in no position to gauge the
prospects of this or that railway line. Indeed there was too much
capital available for railways at this stage. 'Blind capital,
seeking its 5 per cent, a totally different thing from the clear-eyed
capital of the Quaker businessmen from the Midlands and the
North, had accumulated for the raiders.' 1 There was some
speculation too. All this led to a waste of capital. In the boom
of 1836-7 many serious investors had their fingers burned and
became understandably cautious. Even the Great Western had
its cheques dishonoured at one point, and the London and
Southampton was driven to sell its shares at half-price in a
desperate bid to raise money.
The second big railway mania, which developed in the spring
1
T H E
of 1845, was even more spectacular and wasteful of capital. It

was characterized by the large-scale appearance of speculative
capital in the market for railway shares. The solid success of the
earlier railways which had now had time to show their paces
raised hopes of an enormous potential traffic, and a large
number of people in all stations of life sought a share in this
source of wealth. These were respectable if over-optimistic
motives for railway investment. But as the mania got under way
a wider circle of people than ever before began to speculate, not
on the profitability of railways but on the prospective rise in
share prices. 'Ladies and clergymen were tempted by the
facility with which shares in newly projected companies could
be bought for a deposit amounting to only a small proportion
of their nominal value.' 1 Disaster was inevitable. Capital for
local lines continued to come mainly from local sources in the
1840's, but most of the money which poured into the coffers of
the companies during the mania, and was extracted from
reluctant shareholders in the ensuing crash, came from all parts
of the country. Some of it even came from the existing main-line
companies. The Great Western and the North Western, for
example, sponsored a number of branch lines.
In the period which stretched from the 1830's through the
1860's, then, it is evident that a vast amount of capital was made
available to British industry and commerce—at times more
than the economy could efficiently digest. Nor was it only
British industry that attracted British capital. In the second half
of the 1850's the export of capital was flowing at a rate which
represented between 3 and 4 per cent of the total national
product. By 1870 it is estimated that nearly £700 millions had
been invested abroad, more than two-thirds of it in the two
decades since 1850. The golden age of British foreign investment
came later, but the outflow had begun in the 1820's. All this
amounted to a very substantial increase in the volume of
national investment. Except in so far as capital was diverted
from non-productive uses such as the national debt, and this
must have been a negligible fraction of the total, this means that
a large volume of savings was made available from domestic
sources. For investment and savings are merely the two sides of
the same coin. A community spends its income on consumption
or investment: or to put it another way, it takes up its output
1
R . C . O . M a t t h e w s , Study in Trade Cycle History ( 1 9 4 5 ) , p . i n .
in the form of consumption goods or capital goods. If it was

possible for the nation to build up new capital on the scale that
it did, it was possible only because some of its citizens were
willing or obliged to abstain from consuming their full incomes
by a corresponding amount.
Now Britain in the 1840's was not by any means a rich
country. We shall consider in a later chapter the evidence in
the famous controversy about the workers' standard of living.
But whatever the upshot of this controversy, no one would seek
to deny that this was a period of acute social distress for large
sectors of the industrial population, a period which inspired
Marx and gave rise to Engels' sombre account of the conditions
of the working classes in England. How was it possible for a
nation as poor as this to lay down such a massive stock of capital
in such a relatively short period of time?
There had certainly been some increase in thrift since the
industrial revolution had gathered momentum. Government
had set out to encourage habits of working-class thrift since the
1790's when Rose's Act of 1793 consolidated the law relating
to friendly societies. By 1801, according to Eden's estimates,
there were over 7,000 friendly clubs in England with a mem-
bership of 600,000. The first true savings bank (as opposed to
a friendly society or savings club which has an insurance or a
temporary savings motive) was established in 1804. It was called
the Charitable Bank and indeed proved more charitable than
had been its original intention, for the 5 per cent rate of interest
which it paid on deposits involved a loss to its founders and the
Bank had to be wound up. Gradually, however, the movement
spread, and by 1817 there were 70 savings banks in operation
in England. The movement gathered momentum in the boom
period of the early 1820's and grew steadily through the 1830's
and 1840's. By 1830 there were roughly 378,000 depositors in
England and Wales with deposits of over £12 millions, an
average of about £33 per head. By 1845 the number of
depositors (again in England and Wales) and the volume of
their deposits had more than doubled. By then, since the
number of depositors had grown faster than the total of deposits,
the average deposit had fallen slightly, to about £30 per
depositor. The savings habit was spreading among the better-
class artisans and more than four-fifths of the depositors had a
deposit of under
It is evident, however, that working-class personal savings of
this kind were not large enough to make a substantial contri-
bution to the capital available for industrial and commercial
purposes. What were the other sources? We can begin by
eliminating two possible sources of finance for capital accum-
ulation in industry as being of negligible importance in the late
eighteenth and early nineteenth centuries, namely foreign
borrowing and government investment. True, the Dutch had
lent a good deal of capital to eighteenth-century England, and
there had been other countries with an interest in the National
Debt. But the long French wars altered this situation. Amste-
rdam lost its dominance in the international capital market and
was replaced, though not immediately, by London. England
became a lending rather than a borrowing nation, and the
National Debt became largely a domestic affair. Nor was
government an important source of capital, even of the kind of
social overhead capital that was embodied in roads, bridges and
harbours. If anything government was concerned to disentangle
itself from, rather than to embroil itself in, the economic system.
The tendency was, for example, to develop the road system by
means of turnpike trusts rather than by direct government
expenditure. Railways, canals, gas companies, water-supply
companies and so on were operated by private rather than by
public enterprise. Indeed the State, particularly in the late
eighteenth and early nineteenth century probably did more to
attract savings away from productive investment than to add
to the nation's stock of capital. The Usury Laws made 5 per
cent the legal upper limit to the rate of interest chargeable on
commercial loans, but government could, and at times did, raise
loans on terms that were more attractive to lenders than this.
Another way of financing capital formation is to use inflation
as a means of generating 'forced savings'. Chronic inflation has
become a familiar condition in the industrializing underdeve-
loped countries of the present day. In an inflation associated
with an inelastic labour supply prices rise faster than wages;
profits grow more rapidly than either; and because they expect
prices (and profits) to go on rising industrialists are glad to
plough this windfall back into capital formation which will
enable them to produce more and sell more at these attractive
prices. The 'savers' in this situation are the wage-earners who
have to pay higher prices for goods whose costs of production
have not risen correspondingly; the investors are the individual

entrepreneurs who are thus enabled to finance their investments
by the 'forced savings' of their customers.
The thesis that something of the kind happened in England
in the period of the industrial revolution was developed
originally by Professor Earl Hamilton who argued that' If prices
and wages had not behaved as they did, or in similar fashion,
it is doubtful that industrial progress would have been rapid,
pervasive or persistent enough to appear revolutionary to
succeeding generations.'1 The argument is not only that infla-
tion created the forced savings by putting windfall profits into
the hands of potential investors, but also that by creating a
presumption of continuously rising prices they created an
incentive for industrialists to go on investing. In other words
inflation, it is argued, provides both the means and the incentive
for a higher rate of capital formation in industry.
The validity of this argument depends on establishing that
the windfall profits went to the innovating industrialists. In fact,
however, this is not what happened in the British industrial
revolution. For inflation, both in its milder pre-war form which
arose from pressure of a rising population and in its galloping
wartime form, drove up the prices of agricultural products. The
prices of industrial goods in the innovating industries—cotton
textiles, for example, and iron products—tended to fall rather
than to rise. If there was a windfall from rising prices it went
to the farmer or the merchant rather than to the industrialists,
and except perhaps in so far as it freed capital for the landed
interest to lend to canal companies, for example, this windfall
can hardly be said to have contributed to the increase in capital
accumulation. The profits which British industrialists ploughed
back into their businesses came out of the margin between their
falling costs and their less-rapidly falling prices. It had nothing
to do with inflation.2 In any case, once it was past the
inflationary situation of the Napoleonic wars, the English
economy was characterized not by a rising but by a falling
price trend, and there is some evidence for the thesis that
in nineteenth-century Britain 'periods of falling or stag-
nant prices were, normally, the intervals when the largest
increases in production occurred and the greatest decline in
1
E. J. Hamilton, 'Prices and Progress', Journal of Economic History (1952).
2
D. Felix, Quarterly Journal of Economics (1956), p. 457.
1
unemployment'. In sum, therefore, it is difficult to justify the
view that the capital formation of the British industrial
revolution was financed by the forced savings generated by
inflation.
To begin with, as we have seen, the problem of rinding the
capital for the industrial revolution was not so much one of
raising the level of national saving, because the rate of national
investment seems to have grown relatively little, but of re-
distributing funds from those who had resources to spare to
those who had productive ideas for their use. It should be
remembered that although the mass of the people were too poor
to save and average incomes were pitifully low, there were
sizeable pockets of wealth in the community. A century and
more of successful overseas trading had created a mass of
cumulated profits. Professor Postan has indeed argued that as
early as the beginning of the eighteenth century ' there were
enough rich people in the country to finance an economic effort
far in excess of the modest activities of the leaders of the
Industrial Revolution'. 2 Moreover there was a very elaborate
system of credit through trade. So the country bankers and the
city merchants were able to use the idle resources of the rural
gentry or the returned Indian nabobs to finance trade, and
through this to provide some of the working capital of the
industrialists.
Although the shift towards increasing dependence on fixed
capital was already in progress the cost of the new equipment
was typically low in most branches of manufacturing industry
until after the industrial revolution was well advanced. When
the cotton industry was enjoying its output explosion of the
period 1790-1815, a jenny cost no more than £ 5 , a mule £30,
a steam-driven mill £50, a handloom about £11, a stocking
frame £15 and a powerful steam engine £500-^800. 3 Even in
the relatively capital-intensive iron industry it was possible to
build a blast furnace in Scotland as late as the 1830's for no more
than £ 10,000.4 In practice, therefore, it was often possible for
an industrious man to set up in business with very little capital
1
W. W. Rostow, British Economy in the igth Century (1948), chap. 1.
2
M. M. Postan, 'The Accumulation of Capital', Economic History Review (October
!935)> p- 2.
3
Crouzet, op. cit., pp. 37-8.
4
R. H. Campbell, 'Investment in the Scottish Pig-iron Trade', 1830-1843, Scottish
Journal of Political Economy (1954).
and to build up his own resources until they were large enough
to attract the interest of wealthier men. Robert Owen, for
example, began by borrowing £100 from his brother and going,
at the age of 18, into partnership with a mechanic who made
looms; by the time he was 30 he was in a position to bid £60,000
for a spinning establishment. James Watt borrowed in a small
way from his friend Dr Black and then went into partnership
with Boulton, who had inherited the substance of a family
business. Arkwright began by borrowing from a publican friend
and later went into partnership with Strutt, who was already
an established hosiery manufacturer. When Marshall set up a
flax-spinning mill in Leeds in the 1790's he raised the necessary
capital in three main ways: (1) by disposing of his own drapery
business, (2) by borrowing from his friends, and (3) by overdraft
from a bank whose founder was one of a family of linen
bleachers. The iron industry required heavier capital outlays
but again it was financed on a personal basis. The Darbys and
the Wilkinsons had the backing of long-standing family
businesses. The Carron Company which was set up in 1759 to
smelt iron with coke, a venture which required the relatively
large initial outlay of £12,000, was established by three partners
and their families. It was expanded first by bank overdraft, then
by turning the company's bankers and the partners' friends into
shareholders: in 1765 it was expanded again by acquiring new
partners. In each case the capital was acquired by personal
contact.
Once the new enterprise was earning a steady profit it was
usual to finance its continuance and its expansion by ploughing
back the profits or by calling again on the friends of its owners.
'The success of a business depended, to a high degree then, on
its master—upon his powers of managing and arranging his
factors of production and his capacity to attract demand and
make his own market. Hence only those who knew the borrower
and his market would loan them capital.' 1 Later, innovations
in one branch of an industry would be financed by profits earned
in another branch of the same industry. The owners of spinning
mills, for example, were the main source of capital for the
provision of power-looms in Lancashire in the 1820's and 1830's.
In effect, the salient feature of the English capital market in
the late eighteenth century and for more than the first half of
1
Sidney J. Chapman, The Lancashire Cotton Industry (1904), p. 113.
l8o THE FIRST INDUSTRIAL REVOLUTION
the nineteenth century was that it was highly imperfect.
Perhaps indeed it was more imperfect when the industrial
revolution got into its stride and entrepreneurs began to
specialize than it had been in the mobile unspecialized
eighteenth-century economy where men, and their funds,
moved freely from one industry to another. In the newly
industrialized economy savings tended to be generated by the
industries—even by the enterprises—which invested them.
Profits earned in agriculture were generally reinvested in
agriculture and profits earned in cotton generally went back
into cotton (or at any rate into some related industry like textile
processing). Though there was some lending of short-term funds
(by overdraft for example) from rural banks, which thus
provided working capital for industry, most long-term saving
was made with specific investments in mind.
To some extent this imperfection of the capital market was
an institutional problem. Until the Joint Stock Company Act
of 1856 legalized limited liability, corporate enterprise was a
rare form of organization. Incorporation required parliamen-
tary sanction and, except in fields characterized by abnormal
size of capital and relatively unspeculative nature of opera-
tions, e.g. canals, docks, water supply, bridges, roads, insurance
and later gas supply and railways, it was rare for the entre-
preneurs to go to the trouble and expense of securing an Act of
Parliament. The characteristic unit of production was the
family firm, and the characteristic saver was a member of the
family or a friend of the family. Nor indeed did the small
entrepreneur want to seek funds outside his own company and
his own friends, for this would have involved him in undesirable
obligations to strangers. Even the promoters of large-scale
projects like canals were often reluctant to let shares go to
individuals who had no direct interest in the project.
Nevertheless a class of savers ready to invest in channels of
which they had no personal knowledge was beginning to
emerge. The financial reforms of the eighteenth century had
established government as a credit-worthy borrower and by the
second half of the century the non-participant investor was
finding a satisfactory outlet in the Funds. The National Debt
of the Napoleonic wars and the subsequent flotations of loans
in London by foreign governments and mining companies
created new opportunities. Some of these investors were to be
THE ROLE OF CAPITAL l8l
disappointed in the 1820's when foreign governments defaulted
and mining shares proved illusory sources of wealth, but savers
were learning new habits. The education of the non-participant
saver took an immense stride forward in the railway age. It was
as well that it did, for without this new source of funds it is
doubtful whether it would have been possible to finance the
substantial increase in the level of national investment which
took place in this period. In the event, unprecedented sums were
invested in railway companies and, in spite of manias and
depressions, the bulk of these investments survived to earn a
respectable return. 'By the middle of the century railway shares
had been established in the study and the drawing room, and
in the second half of the century newspapers began to publish
as a matter of daily routine the prices of industrial stock for the
benefit of their middle class readers.' 1
To recapitulate, then. How was the capital accumulation of
the industrial revolution financed? The setting up of a factory
or an iron works, the fitting out of a ship, the stocking of a
commercial enterprise—these were investments which required
access to tens of thousands of pounds of sunk capital at the most.
With reasonable trading conditions, investors could expect to
begin repaying most of their initial outlay within a few years
of borrowing it. A reputable inventor or entrepreneur with a
small capital of his own and an innovation which met an
obvious demand could hope to raise the extra funds required
to put him in business by direct loans from relatives and friends,
or from other businesses even, with a strong interest in the
success of his enterprise. This indeed was the way in which it
was generally done. With railways (as for canals or docks) it was
different. They called for hundreds of thousands of pounds to
be sunk immediately in assets that might not begin to yield even
a modest return for several years and might (and generally did)
require still more subscriptions of capital before coming into
effective operation. To obtain funds on this scale the railway
promoter had to be able to tap a wider reservoir of savings and
to go on making fresh calls on this wider reservoir. This required
corporate enterprise, and public issues of stock which was
afterwards freely traded in; and this again was the way it was
done. The massive social overhead capital embodied in canals,
railways, street lighting and water-supply systems was possible
1
Postan, Economic History Review (1935), p. 5.
because the promoters were able to draw on the mass of often
quite small personal and institutional savings which were
becoming available in an economy that had already begun to
industrialize and to grow. To begin with it was largely the
government, the canals to some extent, and then extensively the
railways that were able to tap the savings of the non-participant
investor. Later, overseas governments and overseas railways
were able to tap the same source, partly because the precedent
had already been set and the institutions were already there.
CHAPTER II
THE ROLE OF THE BANKS
One of the advantages with which Britain entered upon the first
industrial revolution was a developed system of money and
banking. It was quite highly developed in relation to the
monetary systems which many twentieth-century underdevel-
oped countries enjoy, and indeed in relation to most of its
contemporaries in Europe: though it still had a long way to go
before it measured up to the standards of a modern state
exercising direct and deliberate control over its own money
supply. How effectively did the banking system of the later
eighteenth century fulfil its task of providing the industrializing
economy with the mobile financial resources required by
economic change and growth?
There had already taken place in England, mainly in the first
half of the eighteenth century, a series of developments in the
money market, an expansion in the number, range and efficiency
of English financial institutions and facilities which amounted
in all to a financial revolution. The centrepiece in this recon-
struction of the English financial system was the Bank of
England and the new system of public borrowing which the
Bank made possible. Around it developed all the other major
financial institutions which grew up during the eighteenth
century—e.g. the insurance offices, the partnership banks, the
great chartered trading companies and the London Stock
Exchange.
The Bank of England had been founded in 1694 in the course
of the company-promoting boom of the 1690's, with a capital
of £ i ' 2 million, its main objective being to raise money for the
government. Within a year of its charter it had taken over the
tricky business of transferring foreign exchange to finance Dutch
William's wars against Louis XIV. In 1700, it offered to store
imported gold and soon began to make loans against such
183
deposits. By the 1720's it was the main source of the Mint's gold
and of the public's guineas.
The primary function of a bank is to act as an intermediary
between borrowers and lenders, i.e. to channel funds from those
who have a surplus over their expenditure needs towards those
whose current expenditure plans exceed their accessible re-
sources. In a nation at war the State is in most urgent need of
immediate purchasing power. In a growing economy, it is the
newly-expanding, innovating entrepreneurs whose prospects
for profitable investment outrun their own funds. In either case,
the role of the banks is to pool the savings of a relatively
numerous body of middle-and upper-class individuals or in-
stitutions and to make them available, against interest, to the
relatively few borrowers who can confidently be expected to
meet the interest and repayment charges imposed on them. The
higher the risk of default envisaged by the lenders the higher
the interest rate they will expect to receive for parting with their
surplus and the shorter the period of loan they will be prepared
to contemplate. A bank which is able accurately to predict the
credit-worthiness of its debtors will be able to negotiate long-
term loans at a relatively low rate of interest.
This was the service which the Bank of England performed
for the parliamentary government established by the Glorious
Revolution of 1688. It enabled successive governments to
finance their abnormal war expenditures by borrowing from the
private sector at rates which became increasingly favourable.
As a result of the successful collaboration between the Treasury
and the Bank in managing the National Debt, there was a
remarkable improvement in the credit status of the British
government, reflected in a sharp fall in the rate of interest at
which it could borrow long term—from 10 to 14% in the 1690's
to 3 % under Walpole and Pelham. During the war of 1739-48
it had become possible for government to borrow cheaply on
terms which specified no repayment date.
The secondary effects of the Bank's financial transactions on
behalf of the government stemmed from the new financial
instruments which were thus created. In return for its loans to
the government the private sector received paper assets ranging
from short-dated bills such as Exchequer and Navy Bills at one
end of the spectrum to Consols (irredeemable long-term debt)
at the other end: and because the paper assets issued by a
THEROLEOFTHEBANKS 185
credit-worthy borrower are themselves readily saleable, the

effect was further to lubricate the channels linking savings and
investment by creating a large stock of negotiable paper assets
which new savers could buy whenever existing lenders wanted
to realize their loans. At the same time the Bank of England (and
the other banks which grew up in its ambit) was attracting
regular deposits which could be used as a basis for further
extension of credit to the private sector. Provided that it held
enough cash to meet the likely day-to-day demands of its
depositors wishing to withdraw their gold and silver, a bank
could issue notes (promises to pay) exceeding the value of its
deposits; and the promissory notes of a trusted bank such as the
Bank of England became paper money in their own right,
exchanging at their face value.
The consequence of establishing an orderly market in claims
to money and credit was therefore to inject into the economy
a large and growing stock of liquid assets and paper money
which helped to facilitate transactions in short-term trade
credit. In effect, the rise of an active London market in securities
in the first half of the eighteenth century solved the government's
financial problem by 'making debts that were permanent for
the state liquid for the individual: subject only to the risk of
capital loss if market forces fell'.1 It helped to attract aflowof
foreign investment into the British economy by giving wealthy
Dutch merchants a safe route for investing in British government
stock. It also made it easier for savers and investors in the private
sector to extend and receive short-term credit by using paper
assets as collateral or as a medium of exchange of purchasing
power. More important still in its ultimate consequences for the
British financial system, the issue of bank cheques or bank notes
on the strength of withdrawable deposits made it possible for
the banking system to create paper money unbacked by real
goods or services.
The essence of the financial revolution of the early eighteenth
century was the development of a wide range of securities in
which the new mercantile and financial companies—the char-
tered trading companies, partnership banks, insurance com-
panies etc.—could flexibly and safely invest and disinvest. The
strength which these new instruments and institutions gave to
the London money market made it possible for the City of
1
P. G. M. Dickson, The Financial Revolution in England (1967).
London to rival and eventually displace Amsterdam as the
financial centre of the world, and the centre of the still
incompletely integrated British financial system was the Bank
of England. In the 1750's it was banker to the government and
to most of its departments. Beginning as a 'speculation with an
uncertain future' it had become a national institution though
it was still not operating as a central bank in consciously
controlling the money supply.1
In principle the eighteenth-century pound was based on
silver—it was still the pound sterling. From the time of Elizabeth
the English pound had been identified with a fixed quantity of
silver. The value of the golden guinea was fixed in terms of a
number of shillings. Actually, however, there was a relative
shortage of silver in most of Europe and still more so in the Far
East, where the current market price was higher than the
English Mint price. It therefore paid merchants to acquire silver
at the ruling English price and to ship it to continental Europe
and the Far East in exchange for gold. The inevitable result
was a debasement of the English silver coinage; and when in
the great recoinage of 1696-8 the clipped silver pieces were re-
placed by full-weight coins with milled edges these gradually dis-
appeared from circulation. Nor indeed was the Mint prepared
to go on coining new silver pieces at this price. So that by the
1760's there was very little silver coin still in circulation apart
from a few worn shillings and sixpences. In effect, if not as yet
in law, England was on the gold standard. In the 1770's this
was formally recognized (though still not yet legalized) by a
reform of the coinage which replaced the light gold coin by
pieces of proper weight and restricted the legal tender of silver
to payments not exceeding £25. It was given statutory recog-
nition in 1816 when gold was declared to be the sole standard
and full legal tender.
In addition to coin there were other kinds of money in
common use by the middle of the eighteenth century. The
earliest surviving cheques date from the late seventeenth cen-
tury, though it is doubtful whether they became at all common
until the nineteenth century. More important were bank-notes;
that is, promises to pay the bearer a specified sum on demand.
The Bank of England had been issuing them to its depositors
from its inception (though it was not until later in the century
1
J. H. Glapham, The Bank of England, vol. i (1944), p. 228.
THE ROLE OF THE BANKS 187
that they came to be of regular round amounts) and they were
used freely as equivalent to cash, for which they could readily
be exchanged, in settlement of debts between individuals. The
private banks also issued notes. In London none of them had
the standing of the Bank of England, and these private note
issues had practically died out by the 1770's. But in Scotland
there was a long tradition of private note issue and in provincial
England the country banks issued bearer notes for local
circulation.
The amount of money supplied to an economy is a matter
of first importance to its development because it affects the level
of prices and through these the level and sometimes the
character of economic activity. If the supply of money does not
expand in step with the expansion of trade in a given economy
—that is to say, if money becomes more scarce in relation to
goods—prices will tend to fall, producers will be discouraged
and it will be more difficult for entrepreneurs to obtain the
financial resources they need to set up or expand their businesses.
Conversely, if money is issued too freely, prices will rise and
investment will tend to be drawn into those branches of activity
which are most immediately affected by the price increase; in
some of today's underdeveloped economies, for example,
inflation tends to stimulate unduly the flow of investment
resources into residential building, where rising capital values
offer rewards which are out of all proportion to the real
productivity of the new buildings. In a pre-industrial economy
where physical communications are poor and perhaps hazard-
ous, as was the case in eighteenth-century Britain, there is the
additional problem of getting the money in sufficient quantity
to the regions which are expanding economically.
What were the determinants of the supply of money in the
first industrial revolution, and how did this react on the level
of prices and the state of trade? The volume of coin in
circulation depended primarily on the supply of gold at the
Bank of England, and this in its turn depended in part on the
world demand for and supply of gold and in part on the British
balance of trade. For if exports exceeded imports this generally
implied an inflow of gold: and conversely, if imports exceeded
exports the excess had to be financed by an export of gold. Gold
in effect was the international currency by which outstanding
debts between peoples of different nationalities had to be
settled. The Bank's ability to put gold coins in circulation

depended on the price which it had to pay for gold on the world
market and hence on the state of the foreign exchange, for it
was this that determined the gold price of the pound sterling.
The connection between the supply of gold and the circulation
of gold coins is thus obvious enough. There was also a connection,
though less direct and automatic, between the supply of
bank-notes and the supply of gold. The complication here is that
notes were issued not only by the Bank of England but also by
the country banks in England and by the Scottish banks. We
do not know what proportion of the total English note issue was
supplied by the country banks but it is clear that their note issue
was important both quantitatively and qualitatively.1 Bank of
England notes were not in common use outside London, for they
were convertible in coin only in London and they were for
relatively large amounts. Until the 1790's the Bank had issued
no notes of lower value than £10. The problems of speedy
transport between London and the regions and the danger of
highway robbery made merchants unwilling to carry stocks of
coin between London and the provinces. Those who wanted
coin and notes in the denominations needed for everyday
transactions with labourers and tradesmen found it convenient
to deal with the country banks which issued smaller notes (e.g.
£1 notes) payable locally and sometimes also issued larger notes
(e.g. £5 or £ 1 o notes) payable in London as well as in the region
of issue. The evidence available suggests that the bearer notes
payable on demand became common in the provinces in the late
1780's and that by then they may have reached a value equal
to or larger than that of the Bank of England circulation. The
statistics are inconclusive on this point, however. There exist
returns of a stamp duty on notes from 1784 onwards but not
until 1804 do they distinguish bearer notes from other forms of
paper credit (such as bills of exchange), and even then they are
dubious indicators of total circulation or variations in circulation
because they do not take account of wastages or of notes
stamped and kept in reserve. In 1808/9, which was the one year
for which the total private stampings were probably quite close
to the total private circulation, the evidence suggests that total
private circulation may have been in the region of about £20
1
The authority on the country banks in the eighteenth century is L. S. Pressnell,
Country Banking in the Industrial Revolution (1956).
THEROLEOFTHEBANKS 189
millions compared with about £17^ millions for the Bank of

England. It seems reasonably certain, however, that during the
last two decades of the eighteenth century and the first three
decades of the nineteenth, the notes issued by the country banks
were at least of the same order of importance in the national
money supply as the notes issued by the Bank of England.
This greatly complicates the question of what determined the
supply of money. We can assume, to begin with, that both the
private banks and the Bank of England gave as much credit and
hence issued as large a volume of notes as they dared. For it was
on these transactions—their loans to the rest of the community
—that they made their profits and justified their existence. A
merchant would, for example, pay for goods delivered by means
of a promise to pay at some future date—say three months
hence—by which time he hoped to have sold enough of the
goods (or what he made of them) to meet the debt. The seller
of the goods would not have to wait three months, however, if
he could persuade a bank to discount the note for him; that is,
to make him an immediate payment of cash for the amount
owing less an amount representing the interest rate plus an
allowance for risk against the debtor's default. This margin was
the bank's profit. If the merchant was known to be a credit-
worthy person the bank would expect payment in full on the
stipulated date and, in that case, the whole of the discount
margin would accrue to it as profit.
When trade was booming and orders were flowing freely
there would be a larger number of recipients of bills of exchange
or promissory notes seeking immediate cash, either in notes or
in coin, from the banks: and the banks would be anxious to
accommodate these clients wherever the credit was good,
subject only to the limits of prudence imposed by the need to
have enough cash reserves to meet any probable demand from
their own depositors. Nowadays the proportion of a bank's
liabilities which it regards as a necessary reserve against a
sudden demand from its depositors is fixed within fairly narrow
and rigid limits. But this is a modern innovation associated with
modern policies of central control of credit and money supply.
Eighteenth-century bankers did not see themselves as instru-
ments of monetary policy. They were purely profit-making
institutions whose duties were to their shareholders and de-
positors rather than to the public at large. They operated a
flexible cash ratio based on their current assessment of the
dangers they ran in extending credit. If trade was good, so that
the risks of credit-worthy debtors getting into difficulties or of
their own depositors requiring cash suddenly were slight, they
could operate with a very low cash ratio. If prospects were less
encouraging they would maintain a larger reserve. The Bank
of England itself operated on similar principles. It too adopted
a policy of discounting any commercial paper which it regarded
as commercially safe and allowed its gold reserve to fluctuate
quite widely. It also regarded itself as obliged to meet all
government demands for credit that offered a reasonable
interest rate.
In this system the limits to the extent to which credit could
be extended and money issued depended on the volume of
deposits and the state of confidence. Ultimately the Bank of
England could not lend more than the deposits with which its
depositors had endowed it; and while it maintained its promise
to convert all notes into gold coin it could not lend more than
its depositors, or those who held notes against these deposits,
might normally want to take out in coin. Similarly, the country
banks whose cash reserve consisted of bank-notes (of other banks
including the Bank of England) as well as of coin or bullion,
could not pay out more than they might need to meet any likely
demands by their depositors. In the end the limit to the
expansion of credit was set by the amount of gold in the country.
That was until 1797, when cash payments were suddenly
suspended and the Bank of England was freed from its obligation
to convert its notes into gold.
Clearly a system of credit which depended so heavily on the
state of confidence was unstable whenever anything happened
to disturb that confidence: though while the system was
incompletely articulated it was possible for a loss of confidence
in one region to end with a few local bank failures. If the
disturbance was sufficiently general, however, the main force of
the strain would fall on the Bank of England, the ultimate
repository of the only true cash. This was what happened in
February 1797 when it was decided to lift the strain by breaking
the link between gold and the money supply. What were the
reasons for this decision?
The immediate first cause was the fact that gold was flowing
out of the country and that there was no immediate prospect
THE ROLE OF THE BANKS igi
of stopping the drain. There had been outflows of gold many

times before in the eighteenth century. In the crisis of 1783 for
example the August balance of bullion in the Bank showed a
reserve of under £600,000—lower than the level at which cash
payments were to be suspended in 1797. But the crisis of 1783
was part of the aftermath of the American war. No one expected
it to persist. Commercial prospects were better than they had
been for some years. There was thus no reason to expect a run
on the banks which went on confidently discounting good
commercial paper and kept the line of credit unbroken. In the
event, confidence was justified; trade expanded; gold began to
flow back into the country; and in 1789 the bullion reserve rose
to a level which was equivalent to more than half the Bank's
total liabilities in notes and deposits; a very comfortable reserve
indeed.
The credit system, as we have seen, depended on a long line
of mutual trust between lenders and borrowers. While
merchants and industrialists were confident of their ability to
discount bills readily, they were willing to go on expanding their
activities wherever these seemed likely to yield a worth-while
profit. While depositors were content with paper receipts for
their investments, bankers could go on extending credit and
issuing new notes to anyone who was likely to earn a good profit
on his activities. The moment depositors felt that banks were
unable to honour their promise to redeem notes with gold they
would rush to make sure of their own share. Had the Bank of
England been at the centre of this credit structure, as it is today,
committed to supporting any other bank facing a run on its
deposits, and able to influence directly the terms on which other
banks could extend credit, then the solvency of the system would
have depended on the situation and policies of the Bank itself.
But although the eighteenth-century Bank of England was the
most important link in the chain it was only one of a number
of note-issuing agencies, and a serious break in the chain of
confidence occurring in a sector over which it had no influence
at all could shake the whole of the credit structure. When one
remembers the multitude of small note-issuing banks operating
in England in the last quarter of the century it seems amazing
that the collapse of confidence did not occur before. That it did
not must be attributed to two main reasons. The first was the
inherent strength of most of the country banks. Some of them
failed altogether: but the majority were operated by substantial

tradesmen who attracted deposits from their neighbours by the
fact that they were known to be sound men of substance, and
who made their advances to people they knew, in trades they
understood, after a shrewd appraisal of the prospects of the
borrowers. Of course there were risks in lending to entrepreneurs
in a newly industrializing economy, but the risks were intelli-
gently undertaken and well spread through the community.
The other main reason for the relative stability of the system
was the fact that the industrial revolution had already intro-
duced a strong upward pressure on the national rate of
economic growth. Commercial prospects were so good that
there were always enough borrowers who could inspire war-
ranted confidence in their ability to earn a good return on
investments, and enough investors who were more intent on
earning profits than on keeping their money safe.
But 1797 was different. The country was at war—a difficult
and dangerous war which was very close to home and whose
character and outcome were totally unpredictable. The French
revolutionary war was not a remote colonial war, nor was it one
of those balance-of-power minuets to which the eighteenth
century was so well accustomed. It was something outside all
previous experience—something much nearer the kind of' total
war' in the twentieth-century style than anything that had ever
happened before. Moreover the trade and industry boom of the
1780's had already been checked. Some over-sanguine hopes
were reversed in the early 1790's and in 1793 some of the
country banks had had to stop payment on their notes. British
overseas trade was facing the usual difficulties of war—disturbed
trade-routes and overseas markets, high transport costs and
uncertain prospects. The level of commercial confidence was
thus unusually low at this period, and for good reason.
Apart from the general situation there were also some special
circumstances which precipitated the crisis of confidence. First
among these was the bad harvest of 1795. Britain's rapidly
growing population could no longer feed itself when the harvest
was below normal, and heavy imports of corn were required in
the season 1795/6. This meant special pressure on the balance
of payments: the tendency was for imports to exceed exports and
so to require an outflow of gold. At the same time government
war expenditure was abnormally large both at home and
abroad. At home it pushed up prices. Abroad, the heavy

expenditure on British fleets and armies, the subsidies to allies,
the loans raised by allies on the British market, all created fresh
pressures on the balance of payments, fresh reasons why
payments to foreigners should exceed the value of receipts from
foreigners and so have to be met by the export of gold. An
additional special reason for the outflow of gold at this stage was
that there was an abnormal demand in France. The French
government was struggling to put the French currency—
reduced to a fraction of its pre-war value by the disastrous
experiment in paper money—back on to a sound footing again.
So keen was the demand in Paris in late 1795 that gold fetched
£4. 3J. per ounce in London and in guineas it was obtainable
for £ 3 . 17^. iOyrf. 'Direct transit was of course illegal, but it
happened. In one way or another the gold went. . .In spite of
the risks and costs of transit and insurance the temptation to
melt or smuggle was overwhelming.5| The Bank tried to reduce
its liabilities to a less dangerous level by limiting its discounts;
but while the country banks were ready to supply the rising
demand for money created by rising prices its attempts to
restrict credit merely weakened confidence without reducing
the note issue. In the end the landing of a small French force
at Fishguard caused a panic run on the country banks who in
turn presented their Bank of England notes for repayment, and
the system broke. The government, faced with the problems of
organizing a major European war, dared not risk its own gold
reserves. In 1797 the Bank was forbidden to make any payments
in gold or silver except for the armed forces abroad, and the
country banks had no option but to follow suit. Another Act
authorized the issue of notes of less value than £ 5 , and Bank
of England notes became for the first time legal tender. Gold
disappeared largely into hoards and the age became one of
banknotes and tradesmen's tokens.
In principle, then, the limits to the expansion of credit were
lifted by the suspension of cash payments. The country banks
might have to make sure that they had enough Bank of England
notes to meet a sudden demand for immediate cash: but the
Bank itself could go on without limit. Under the circumstances
it is perhaps surprising that the money supply did not expand
faster than it did. No attention seems to have been paid by the
1
Glapham, Bank of England, vol. i, p. 268.
T H E
Bank's directors either to the state of the exchanges or the
market price of gold, and throughout the restriction period they
were ready to discount at 5 per cent any legitimate commercial
bills and to print notes accordingly.
Contemporaries criticized the Bank for over-expanding
credit and blamed it for the inflationary price-rise which
occurred during the war period. Recent researchers have been
inclined to absolve the Bank from blame on this score. During
the first decade of the suspension period the price-rise could
largely be attributed to bad harvests and war conditions. Indeed
there was little depreciation of sterling, whose gold price
fluctuated between quite narrow limits during this decade. The
depreciation which occurred in the later war period (foreign
gold coin was 43 per cent above the Mint price in 1812) was
also a consequence of non-monetary factors, such as the
difficulties which Napoleon's continental blockade put in the
way of British overseas trade or commercial speculations asso-
ciated with the opening up of new markets to South America.
In effect, the Bank's role seems to have been largely passive, as
indeed it was intended to be. It saw its role as that of supplying
the needs of government and the private sector with the money
needed to conduct the war and to carry on the nation's
industrial and commercial activities. The rise in prices was a
cause, not a consequence, of the increase in the note circulation.
Whether, in the circumstances of the time, it would have been
advisable for the Bank to adopt a more active role in the
economy, and to follow a discount policy designed either to
stabilize domestic prices or to maintain the exchange value of
sterling, is dubious. By so doing it might well have hindered the
expansion of the economy and so reduced its ability to support
the war. In the disturbed years which followed Waterloo the
Bank continued to pursue its passive role, and it took a further
six years before the gap between the Mint price and the market
price of gold came close enough to permit a resumption of cash
payments in 1821.
In 1821, then, the wartime emergency monetary system came
to an end and Britain went formally and legally on to the gold
standard. English monetary institutions at the date consisted of
(1) a central joint-stock bank—The Bank of England—which
acted as the government's bank and custodian of the nation's
gold reserve, (2) about 60 London private banks of great
strength and reputation but without note issue, and (3) about
800 small private note-issuing country banks uncontrolled in all
matters except the denominations of the notes issued. In this
third group lay both the weakness and the strength of the
English banking system of the 1820's; the weakness showed up
in the first great financial crisis of the decade.
These banks had already played an important part in the first
industrial revolution. One of the problems which the merchants
and the industrialists of the later eighteenth century had
constantly to contend with was crippling shortage of ready cash,
particularly cash in denominations small enough to pay out in
labourer's wages. There was an international shortage of gold
and silver which drew gold and silver coin out of circulation and
into the melting-pot: and there were even occasions when the
price of copper rose higher than the mint price and thus induced
a shortage of copper coin. According to Ashton, eighteenth-
century employers spent much time 'riding about the country
in search of cash with which to pay wages and in the northern
and western parts of England the dearth of coin was often
acute'. 1 Many employers took to paying their labour in
promissory notes or tokens which were redeemable with the
local tradesmen. Some, like John Wilkinson the iron-master and
the copper magnate Thomas Williams, minted their own copper
coins redeemable in London and Liverpool as well as in the
region of the iron-works and copper-mines. It was the need to
satisfy this pressing need for ready cash as well as to find outlets
for the surplus capital of the well-to-do population of the
provinces that inspired hundreds of little country banks to issue
notes of relatively small denominations such as £1 or £2. Their
numbers began to grow significantly in the 1750's and 1760's
and the 'last twenty years of the eighteenth century saw a huge
crop of new private banks in almost every part of the country'. 2
They continued to grow into the first and second decade of the
nineteenth century.
Because they were small and because their success hinged on
maintaining confidence, the country banks depended heavily
on personal connections. They were prevented by law from
being big. To protect the public against the growth of giant
1
2
R. S. Sayers, Lloyds' Bank in the History of English Banking (1957), p. 2. See also
Pressnell, Country Banking in the Industrial Revolution, p. 7.
banking companies whose failure might have nationally disas-

trous effects, eighteenth-century legislation forbade the estab-
lishment ofjoint-stock banks with more than six partners. This
hindered the development of specialist banking institutions, and
most of the country bankers were primarily or originally
engaged in some other kind of business for which banking was
a natural and lucrative sideline—particularly in view of the
shortage of means of payment. Bankers often originated in
industry or trade, for example, or in the legal profession. The
location of factories and foundries tended in the early days of
the industrial revolution to be determined by the proximity of
raw materials or of water-supply and hence to be in remote
districts with no existing banking facilities. So the entrepreneur
had to create his own banking service. Traders who constituted
the link between the world market and a localized region of
production or trade also had to develop their own banking
facilities. Often, too, tax-collectors became bankers or bankers
tax-collectors, taking advantage of the long delay between
collection of a tax and its receipt into the exchequer to use public
money for private profit. One of the consequences of this
heterogenous banking system was that when the pioneers of the
industrial revolution went in search of capital, they could hope
to find local bankers who had access to enough personal
knowledge about the borrower on the one hand, and enough
practical knowledge of the trade or industry concerned on the
other, to be able to take risks which a less personally involved
banker would find incalculable and therefore out of range.
Probably the English banks have never been so ready to assist
innovation or to finance long-term investment in industry as
they were in the period 1770-1830 when the industrial revo-
lution took shape.
Of course the system had its disadvantages, particularly as
communications improved and it became more closely articu-
lated. A 'state of confidence' is a wayward mood and it was
possible for a sta»te of misplaced confidence to develop a
momentum of its own. The potential consequences of this
became more dangerous as the economy expanded. 'Economic
expansion involves a growth in the scale of the demands for
accommodation with which the banker is confronted and there
arise difficult technical questions of spreading the risk adequa-
tely as well as the liquidity of the loans granted when a set-back
M
occurs in economic conditions. Over the period 1809-30 there
were 311 bankruptcies of country banks, of which 179 took place
in two crisis triennia—1814/16 and 1824/6. In effect, the
existence of hundreds of little note-issuing institutions, each
operating according to its own rules and policies, not all equally
efficient or honest, rendered the whole chain of credit as
vulnerable as some of its weakest links. There was little that the
Bank of England, for example, could do to expand or restrict
credit when there were so many other sources of credit in the
economy. The essential weakness of the credit structure was
brought home to the nation in the mid 1820's when a speculative
boom, taking its origins in the recovery and 'reflation' which
began in 1823, deteriorated into a financial collapse in 1825.
There was a wild burst of company promotions, heavy foreign
lending on many lunatic South American mining projects,
many exports that were never paid for. When the boom broke
it not only bankrupted a number of country banks, it almost
drove the country off the gold standard. By the end of 1825,
73 banks in England and Wales had suspended payment and
there was very nearly a stoppage at the Bank of England itself.
The government took hasty action. Legislation introduced in
1826 reduced the influence of the country banks by prohibiting
the issue of notes under £ 5 , permitted the establishment of
joint-stock banks with more than six partners (except within a
radius of 65 miles of London) and authorized the Bank of
England to set up branches of its own throughout the country.
A later Act, in 1833, permitted joint-stock banks to set up within
the area in and about London, provided the banks did not issue
notes.
Although the legislation of 1826 and 1833 broke the Bank of
England's monopoly of joint-stock banking it had the effect of
greatly strengthening the Bank's position. For it gave the Bank
virtual monopoly of note issue in and around London and
enabled it to operate directly in the provinces. Bank of England
notes, for example, became a particularly important part of the
money supply in Lancashire. There was still a good deal of
opposition to the Bank as arbiter of the nation's money supply,
for extreme views on * economic liberty' were popular and the
Bank had many enemies among the influential country bankers.
It was not until the Bank Charter Act of 1844 concentrated note
1
T. E. Gregory, The Westminster Bank, vol. i (1936), p. 4.
THE FIRST INDUSTRIAL REVOLUTION
issue in the Bank of England that final supremacy of the Bank

as the corner-stone of the nation's credit structure was ensured.
Between then and the end of the century the old country banks
disappeared, their banking services being taken over by the
giant London joint-stock banks, their issuing rights devolving
on the Bank of England.
In the half-century or so which led up to the Bank Charter
Act of 1844 the English monetary system had been through a
considerable range of experience. There had been a long period
of total war and a period of post-war dislocation; there had been
a considerable increase in the national rate of economic growth
and in the character of the demands made in the credit system;
there had been a period of non-convertibility, a difficult period
of trying to restore convertibility and some alarming financial
crises. It was evident that the monetary system called for reform
though it was by no means clear exactly what kind of reform
was required. An active controversy developed among econo-
mists, bankers and all those concerned with the formulation of
economic policy. This controversy took various forms at various
stages in the economic experience of the period: here I shall
concentrate on the forms that it took immediately before the
Bank Charter Act.
Then the controversy crystallized into the opposition between
two 'schools' of thought: the 'currency' school and the 'bank-
ing' school. It is convenient to see these two streams of opinion
as two 'schools' of thought but it is important to remember that
in so doing we over-simplify the situation. The main protagonists
in the controversy cannot be neatly dropped into one pigeon-hole
or the other. There was a good deal of variation between them
and a good deal of common ground. When we look back on it
from the vantage of the twentieth century the common ground
is almost as significant as the disputed ground. What both
groups took for granted was that an 'automatic' monetary
system in which the value of the currency was firmly linked to
gold (and hence to the money-rates and price levels of all other
countries on the gold standard) was the ideal to be aimed at.
This view stands in sharp contrast to the prevailing modern view
that currency values ought to be controlled by government and
adapted to domestic needs rather than to international
standards. It was fully in accordance, however, with the
economic liberalism that stemmed from Adam Smith and his
contemporaries and was to become the distinguishing charac-
teristic of the Victorian age. To the rising entrepreneurs of the
early nineteenth century it was important to keep government
interference with the economy to as low a level as was consistent
with the maintenance of some semblance of economic order:
and the economists were inclined to agree with them.
The problem was, of course, how was the economic order to
be maintained—more particularly, how was the economy to be
protected from the recurrent financial crises which caused such
an unnecessary flood of bankruptcies and social distress, and
sometimes threatened the solvency of the central bank itself? In
1825 a n d m x^39 t n e Bank of England had been as near as it
could be to having to stop payments of cash: in the former crisis
it had been saved, or so it seemed, only by the lucky find of a
parcel of a million one-pound notes in reserve; in the latter crisis
only by mobilizing a credit with the Bank of France. On both
occasions it had been a very near thing and it was not
reasonable to suppose that it would always be as lucky.
It became increasingly evident during the first few decades
of the nineteenth century that the foreign exchanges were a
vulnerable part of the system and an important source of
financial crises. In the restriction period the Bank of England
steadily refused to recognize the connection between the foreign
exchanges and the note issue. Its directors considered that the
function of the Bank was supply the 'legitimate needs of
commerce' and that so long as they continued to discount sound
commercial paper there would be no danger of an over-issue
of notes. It was only when they lent out money for speculative
purposes that the danger arose. The difficulty about this policy,
however, is that it is not always easy to distinguish the
'legitimate' needs of commerce from speculative ventures. If
during an excess of confidence (such as existed in the first part
of the 1820's) the banks met all the reputable requests for credit,
prices would rise as entrepreneurs competed for resources in
short supply, demand for British exports would contract as their
prices rose, and demand for imports (stimulated by rising
incomes and expectations) would rise; and of course gold would
begin to flow out to finance the excess of imports.
The fact that an unfavourable balance of trade could actually
be caused by unduly high prices, which could only be reduced
through a contraction of credit, was pointed out by Ricardo and
2OO THE FIRST INDUSTRIAL REVOLUTION
the Bullion Committee during the controversy that raged

around the depreciation of sterling during the latter part of the
war period. This insistence on the closeness of the relation
between the exchanges and the domestic note issue was the
foundation of the currency-school theories. They argued that
the only way of protecting the economy against over-issue was
to make paper behave in exactly the same way as a purely
metallic currency would have done. If gold flowed out, the
quantity of money should be contracted, just as it would have
been by an outflow of gold coin when these were the sole form
of currency. To let the banks follow their profit motive in
extending all the credit that reputable merchants and indus-
trialists might demand was to run straight for a financial crisis
whenever entrepreneurs' expectations proved to have been too
optimistic.
The banking school, on the other hand, argued that adverse
exchange rates generally arose from independent causes, such as
bad harvests or an abnormal foreign demand for gold, and that
it was no solution to these problems to contract domestic credit.
Thus exchange fluctuations would revert to normal as soon as
the special causes had worked themselves out, and the duty of
the banks was to keep enough reserve of bullion to weather this
kind of storm. It was when the banks contracted credit without
reference to domestic needs, the banking school argued, that
financial crises developed. The banking school also pointed out
that notes were not the only form of money and ridiculed the
currency school's obsession with the note issue as such. 'They
pointed to the great volume of country notes, bills of exchange
and cheque payments, and to the machinery of the bankers'
clearing house, whereby immense payments were made without
the passage of a negotiable instrument at all. Was it reasonable,
they asked, to suppose that this enormous volume of purchasing
power was sensitive to small changes in a Bank of England note
issue amounting to only about £20 millions in all?' 1 It was
already clear in the second and third decades of the century that
the country bank-note issues could go on expanding even when
the Bank of England was restricting its own issue.
In the end the currency school's views prevailed in the Bank
Charter Act. They had already won the day within the Bank,
whose directors had by the 1830's come to admit the connection
1
E. V. Morgan, Theory and Practice of Central Banking (1943), p. 125.
THE ROLE OF THE BANKS 2OI
between the note issue and prices and between prices and
exchange rates. It was then that the so-called ' Palmer rule' was
explicitly enunciated, if not put into full operation. This rule,
named after Horsley Palmer, a governor of the Bank, proposed
that the Bank should keep about two-thirds of its total liabilities
in securities, leaving about one-third as a bullion reserve: and
that it should contract or expand its note issue in response to
the fluctuations in its bullion reserve; or in other words that the
circulation should behave as though it was wholly metallic.
What the exponents of the * Palmer rule' were looking for was
an automatic principle of monetary management which would
free the Bank's directors from active responsibility for currency
control.
It was the kind of automatic mechanism that Peel tried to
set up with the Bank Charter Act of 1844. Believing that
banking ought to be separated from control of the currency,
because its objectives were totally different (one being to
provide credit, the other being to regulate the price level) he
separated the two functions. Believing that the note issue should
be a paper reflection of the nation's gold reserve, he gave the
custodian of the nation's bullion the ultimate rights of note issue
and made all but a fixed quota of the note issue a direct function
of the gold-bullion reserves. To ensure that the Bank should be
seen to abide by the clearly established rules of the game he
insisted on weekly publication of accounts.
The Bank Charter Act, which established the Victorian
supremacy of the Bank of England and wrote laissez-faire
principles into orthodox monetary policy, did not solve the
problems of the British banking system. The next 30 years were
amongst the most troubled in the history of the banks. There
were three major crises, in 1847, in 1857 and in 1866, each of
which produced its crop of bank failures both amongst the
private banks and the joint-stock banks. In this hard school of
experience the banks which survived each shock learned a new
kind of caution. They began to realize the importance of being
continuously liquid, and accordingly learned to avoid long-term
investments which might lock up sizeable resources in a par-
ticular industry. Now that there were no longer any restrictions
on their size they learned also to spread their risks over the
regions by developing a national network of branches. These
were years of experiment and adaptation and uncertainty. Even
2O2 THE FIRST INDUSTRIAL REVOLUTION
the Bank of England was for a number of years uncertain as to

its role in the economy. It made no attempt to control or lead
the market for funds or to check speculation, for example,
though it did not hesitate to put bank rate up to panic levels
of 10 per cent when bullion began to flow out strongly.
Nevertheless, although these were years of experiment the
banks continued to play a vital and flexible role in the
expanding economy. They had already built up a complex
service for the overseas trade. By the early 1830's Nathan
Rothschild could say in evidence to a Committee on the Bank
of England Charter that 'England is the place of settlement for
the whole world',1 and London bankers were providing credit
to support trade in goods which never found their way to
Britain. When in the 1830's and early 1840's it appeared that
there was a surplus of funds in the economy the banks helped
to channel it to the railway builders and to feed the railway
boom. When the railways were saturated with funds and the
non-participant investor was looking around for fresh outlets for
his surplus the banks were able to use their experience of
overseas economies to guide his capital abroad. Throughout the
first three-quarters of the nineteenth century the salient feature
of the typical bank portfolio was the wide variety of investments
which it contained. To the modern banker, accustomed to
being able to build up a safe portfolio, with a wide spread of
maturities, almost entirely out of the paper assets created by an
enormous public debt, the risky character of a nineteenth-
century bank's portfolio would seem quite shocking. But their
nineteenth-century investments were productive investments in
the sense that the national debt was not, and they made an
important direct contribution to the finance of British trade and
industry.
1
Report from the Committee of Secrecy on the Bank of England Charter (1833), Minutes of
evidence 4866.
CHAPTER 12
THE ADOPTION OF FREE TRADE
An elaborate system of tariffs designed to protect domestic

industry from foreign competion is the hall-mark of a static
economy where the major task of commercial policy is to
maintain the status quo. Innovation and successful industriali-
zation, however, provide opportunities for expansion and en-
courage a less restrictive commercial policy. Before the end of the
eighteenth century English manufacturers had begun to realize
that their interests lay less in the swaddling clothes of Protection
than in an opening up of the channels of trade. The Eden Treaty
which relaxed some of the tariffs on trade between Britain and
France in 1786 was a measure of their growing confidence.
Adam Smith's forceful arguments in favour of freer trade were
having their influence on the minds of statesmen and policy
makers.
The long wars which began in 1793, however, reversed the
trend towards Free Trade by introducing a multitude of new
uncertainties into the economic situation and by forcing the
government to raise revenue-yielding tariffs in the effort to
finance the war. The economic uncertainty and the search for
government revenue persisted into the post-war aftermath, and
although statesmen reared in the doctrines of Adam Smith paid
lip-service to a more liberal commercial policy, producers
had lost their nerve. 'The great expansion in agriculture and
industry had brought habits and commitments attuned to high
prices and profit levels. Faced with difficult and unpleasant
readjustments and with reviving European competition the
vested interests, new and old alike, felt that they needed stiff
duties and prohibitions to keep afloat.51 Moreover, without the
income tax, which had been jettisoned as soon as possible after
the war, no government could afford to go far in the direction
of free trade.
1
A . H . Imlah, Economic Elements in the Pax Britannica (1958), p. 118.
2O3
In the 1820's it proved possible to take more positive action.

Between 1823 and 1825 trade was expanding and manufacturers
were recovering some of their confidence. In 1824 anc ^ x ^ 2 5 t n e
government was running a surplus, and Huskisson accordingly
managed to get through Parliament measures reducing import
duties by a total of over £4. million a year: in 1826 there were
some further cuts amounting to about half a million pounds.
This represented a very modest advance towards free trade.
Indeed Britain was effectively more protectionist even after the
reforms of the 1820's than she had been in the pre-war period.
The average rate of duty on net imports was still in the region
of 53 per cent in the late 1820's compared with 57 per cent in
the early 1820's and under 30 per cent at the end of the
eighteenth century. Huskisson was concerned not so much to
abolish protection as to rationalize the tariff system. He did
away with import prohibitions and prohibitive duties and
export bounties, none of which were yielding any revenue. He
reduced to nominal levels some of the rates which fell on the
raw materials of British industry and thus inflated manufac-
turers' costs. For other products he aimed at a tariff ceiling of
30 per cent in order to discourage smuggling. At the same time
he liberalized the Navigation Laws so as to extend rather than
to restrict the trade of the colonies. In effect he reshaped the
old colonial system into a new system of imperial preference.
The colonies were permitted to enter the field of international
trade on their own initiative and on their own terms, provided
that they granted preferential duties to British goods. With
foreign countries, on the other hand, he proceeded on the
principle of reciprocity. From then on Britain proceeded to use
its tariffs as bargaining weapons, and successfully set out to
negotiate reciprocity treaties abolishing or equalizing duties on
a reciprocal basis with most of its commercial rivals.
For a while this had to suffice. The worst excesses of the
British tariff system had been removed and the liberal reformers
of the 1830's were too preoccupied with institutional and
constitutional questions to take it further. Then, in the 1840's,
Peel returned to the task of rationalizing the finances of the
British Government. He found the tariff much as Huskisson had
left it, though the burden had lightened, largely because there
had been a disproportionate increase of the volume of trade in
these commodities (raw cotton and wool were outstanding
THE ADOPTION OF FREE TRADE 205
examples) on which the duty was very low, so that by the late
1830's the average rate of duty on net imports had actually
fallen to 31 per cent of their market value. Nevertheless there
was still room for another spring-cleaning exercise—the Com-
mittee on Import Duties which reported in 1840 found 1,146
articles liable to duty, although 17 articles produced 94^- per
cent of the total revenue. 'At the other end of the scale 531
articles yielded only £80,000, in many cases because the duties
were so high as to reduce trade to a mere trickle.'1
Peel's first budget, introduced early in 1842, did not go very
far in the direction of lightening the tariff burden. He put a
ceiling of 5 per cent on duties on raw materials, 12 per cent on
partly manufactured goods and 20 per cent on manufactured
goods. The duties on spirits and wines he preferred to retain
unchanged so that he could use them as bargaining weapons
in reciprocity agreements. Taken in the aggregate, his reductions
amounted to less than those involved in Huskisson's 1824
measures. But the significant feature of his budget lay in the
reintroduction of income tax. This, by giving the government
an alternative source of revenue, effectively opened the way to
complete free trade. In 1845 t n e income tax was renewed and
duties were repealed on 450 articles and lowered on many
others. The introduction of the income tax, however, was no
more than a permissive factor in the situation. The crucial step
towards complete free trade, the most significant break with the
pre-industrial past, was the repeal of the Corn Laws in 1846.
Among the structural characteristics that lie at the heart of
every industrial revolution is the change in the position of
agriculture. From being the dominant industry of the pre-
industrial economy, agriculture shifts to the ancillary position
which it takes in an industrialized economy. Nowhere did the
transformation, the reduction of agriculture to a subordinate
role, go farther than it did in Britain. The shift took place over
a long period of time and to a large extent spontaneously. As
industry and transport reduced their costs by innovating and
so became more profitable, and as trade expanded, most of the
annual increment in the labour force and in the capital stock
moved into these more lucrative activities. The share of agri-
culture in the gross national product of the country (though not
1
Alexander Brady, William Huskisson and Liberal Reform (1928), p. 94.
its absolute size) had begun to decline before the middle of the
the eighteenth century. By the middle of the century it had
probably fallen below a half; by the early years of the nineteenth
century it was at about a third and then about a fifth by 1851.'
It was after the middle of the nineteenth century that the rate
of transformation became really rapid. By 1881, as Britain
began to draw a large part of its food supplies and raw materials
from overseas, the agricultural industry accounted for only
about a tenth of gross national product and by 1901 its share
had fallen to near 6 per cent.
In this culmination of the industrialization process the
ultimate cause was the radical change in commercial policy
which was symbolized by the repeal of the Corn Laws. What
is particularly interesting is that it came at the end rather than
at the beginning of the period of the industrial revolution
proper. At the beginning of the period Britain was a grain-
exporting country. In the middle of the eighteenth century
England was sending out enough grain to feed a million people
per annum—a surplus equivalent to the staple food supply of
about a quarter of its population. In the second half of the
eighteenth century, however, the picture changed completely.
The growth of population, of towns, and of the non-agricultural
labour force and a spate of bad harvests rapidly took up the
nation's grain surplus. In the course of a series of bad harvests
the exports of corn dwindled to nothing after 1765 and by the
end of the century England was on balance a net importer of
corn except in years of abundant harvest. By the 1840's Britain
was feeding between 10 and 15 per cent of its population on
foreign wheat.
For most of this period the levels of import and export were
artificially lifted or depressed by legislative policy. There was
no free overseas trade in corn. It was to be expected of course
that a government of a pre-industrial community, with a fairly
narrow margin of subsistence, would regard itself as having
special legislative responsibilities in connection with the nation's
staple food, and the Corn Laws have a long history in England.
Adam Smith, with characteristic disapproval of government
regulations, wrote scathingly on this point.
For these estimates of the contribution of the agricultural industry to gross national
product of Great Britain see Deane and Cole, British Economic Growth, e.g. p. 291.
The laws concerning corn may everywhere be compared to the laws

concerning religion. The people feel themselves so much interested in
what relates either to their subsistence in this life, or to their happiness
in a life to come, that the government must yield to their prejudices,
and, in order to preserve the public tranquillity, establish that system
which they approve of. It is upon this account perhaps that we so
seldom find a reasonable system established with regard to either of
these two capital objects.1
Certainly in the years which preceded the repeal of the corn
Laws something very like a religious movement developed, a
crusade almost, that roused human passions on a scale and an
intensity even greater than those roused by the anti-slavery
movement.
It was in the second half of the eighteenth century that the
Corn Laws became a vital policy issue. During the strong
growth of corn exports which characterized the period up to the
175o's the important thing about the Corn Laws was that they
provided for a bounty on exports. The fact that importation was
also regulated was of very little importance in a country with
a relatively stagnant population and a rising agricultural
output. ' I t was only when the amount paid out became so
enormous that the local customs funds were inadequate and the
debentures given by customs offices were not honoured by the
Treasury in Westminster because of lack of funds'2 that
indignant voices were raised. But this inability of the government
to pay the bounties to which it was legislatively committed was
a temporary problem. As the home-market expanded, the
claims for bounty diminished. In the next few decades the only
revisions called for in the Corn Laws were occasional downward
and upward adjustments to the price levels at which bounty was
paid or duties collected—adjustments which were not intended
to do more than take account of changing price levels.
It was in the 1790's that the problem of the Corn Laws began
to reflect the class struggle. Bad harvests caused food riots (as
they had often enough done before), particularly in the
starvation years 1795/6 and 1799/1801. And in the tense
atmosphere created by the excesses of the French Revolution
these riots assumed a deeper significance than they might
otherwise have had. 'Landowners frankly said that it was as
1
Adam Smith, Wealth of Nations, vol. n, p. 42.
2
D. G. Barnes, History of the Corn Laws (1930), p. 288.
important to defend their property from the mob as from

Napoleon.' 1 The growing army of labourers and industrial
workers became conscious, as never before, that their interests
diverged from those of the landed gentry who then determined
economic policy; and nowhere was this divergence so marked
as in the case of the Corn Laws.
At the end of the war the agricultural interest dug itself in
behind a high wall of protection. The bounty had been
abolished in 1814; it was already an anachronism. In 1815 the
existing sliding scale of duties which permitted the imports of
corn to vary with the market price was abandoned in favour
of absolute prohibition up to a certain price level (80s. per
quarter in the case of wheat) and duty-free admission above
that price. For the next 30 years the Corn Laws were one of the
key issues in British social and economic policy, a symbol of the
conflict between rich and poor, between agriculture and
manufacturing industry and between free trade and protection.
They kept the price of food high and so depressed real wages.
But they provided a measure of protection to what was still the
major British industry—agriculture.
War, as it usually does, had brought relative prosperity to
agriculture. The price of food soared. Wastes and commons
were put under the plough to supply an insatiable demand for
food. Farmers with ready cash could afford to improve their
horses and cattle, to lime and manure their land, to erect strong
buildings and drain bogs. People who had to buy their food
suffered a loss of real income in the country as in the town, but
on balance it is reasonable to suppose that the countryman held
his own better in conditions of food scarcity than his urban
counterpart. The landowners enjoying rising rents took much
of the burden of war taxation and the landless labourers
depended heavily on poor-relief. Except in years of unusual
dearth agriculture prospered.
The aftermath of war was another story. Prices collapsed,
rents dwindled, profits vanished and capital in stock, land and
buildings deteriorated rapidly. For nearly a quarter of a century
agriculture endured unrelieved misery; the distress affected
landlords, tenant-farmers and labourers together. 'Between
1813 and the accession of Queen Victoria falls one of the
1
ibid. P . 286.
THE ADOPTION OF FREE TRADE 2Og
1
blackest periods of English farming.' It was this deep agricul-
tural distress rather than the enclosure movement that drove
the small yeoman farmer off the land. Unable to weather the
violent fluctuations in prices and the crushing burden of
poor-rates many small farmers sold up, or got out, and became
applicants for pauper allowances. Agricultural labourers were
thrown out of work and wages tumbled. 'Those who had saved
money or bought a cottage could not be placed in the poor-book:
they were obliged to strip themselves bare and become paupers,
before they could get employment.' 2
Reports and inquiries into agricultural distress were num-
erous and we may tend to exaggerate the extent and depth of
the demoralization in the rural areas when we take our evidence
from these highly coloured accounts. But the rural riots and the
incendiarism that were endemic in this period confirm the view
that the morale of the agricultural sector was at a desperately
low ebb in the quarter of a century or so that followed Waterloo;
and it is worth recalling again that, even as late as 1850,
agriculture was still the major British industry. Whatever
affected the level of incomes in the agricultural sector affected
the standard of living of more than a third of the population
of Great Britain during most of the first half of the nineteenth
century.
In the circumstances it is difficult to see how any responsible
government could have abandoned the Corn Laws and sub-
jected the nation's chief industry to another burden—the chill
winds of foreign competition. True, most of the classical
economists, following the line set by Adam Smith, were in
favour of free trade in corn, as in other commodities. Their most
authoritative representative, David Ricardo, argued indeed
that only the landlords, whose interest 'is always opposed to the
consumer and manufacturer' were the gainers from a policy
designed to maintain corn prices.3 Manufacturers were against
the Corn Laws because they regarded them as inflating indus-
trial wages and reducing urban purchasing power for non-food
products. Liberal reformers opposed them in the interests of the
hungry poor and in opposition to the rich landlords. But even
1
Ernie, English Farming Past and Present (1936 ed.), p. 319.
2
Ernie, English Farming Past and Present, pp. 328-9.
3
David Ricardo, The Principles of Political Economy and Taxation, Everyman ed., ed.
Donald Winch, p. 225.
2IO THE FIRST INDUSTRIAL REVOLUTION
if most of the effective policy makers in parliament and the

cabinet had not been members of the landed gentry and
aristocracy it would have been surprising if they had wilfully
chosen to add to the problems of a desperately depressed
agriculture. Actually they did add to its problems by an attempt
to reduce the completeness of protection in 1828. The Act of
1828 introduced a sliding-scale duty which varied with the price
of wheat in the preceding six weeks. If the averages were below
67s. the rate of duty became virtually prohibitive: above this
price the duty fell jerkily from 1 y. at 69s. to is. at 73^. The effect
of this was to push up the price of corn by making its
importation into Britain a risky and speculative business and
to discourage farmers by introducing unpredictable fluctuations
into their incomes.
The debate over the Corn Laws ebbed and flowed in the
1820's and 1830's and flared up in the 'forties. In times of bad
trade, merchants and manufacturers called for repeal. In times
of good trade they were more concerned with some of the other
vital issues of the day—currency reform, for example, or
constitutional reform. In the second half of the 1830's, however,
the fundamentals of the situation began to change. For one
thing, agriculture seemed to be emerging from its desperate
depression. It is not clear exactly when or why the improvement
took place. Recovery from distress is always less well documented
and less spectacular in its effects than the downward plunge.
But if we cannot establish the date of the turning-point for
agriculture we know that its circumstances changed for the
better. In the middle decades of the nineteenth century agri-
culture enjoyed three to four decades of progress and prosperity.
Rents and profits rose and the area under corn expanded. There
was an increased use of fertilizers, a spate of improvements in
agricultural implements and machinery; there was more
expenditure on breeding and housing livestock, on farm
buildings and roads and on drainage schemes.
Various reasons have been suggested for this improvement in
the economic situation of agriculture. One helpful factor was
that the new Poor Law improved its tax position by lifting the
burden of the poor-rate. Expenditure on poor-relief, which
exceeded £7 millions in 1832, was not much more than £\
millions in 1837. Wages had to rise of course. But it is reasonably
certain that farmers lost less in higher wages than they gained
from the reduced poor-rate. The Tithe Commutation Act of
1836 also gave some relief to agriculturalists by removing an
irksome tax on the annual produce of the land which could be
claimed in kind, was in any case highly variable as between one
year and another, and was a perpetual source of litigation, and
by replacing it by a corn-rent fluctuating predictably with the
septennial averages of the prices of wheat, barley and oats.
The second group of reasons that is often advanced for
agriculture's rise from the depths attributes it to an increase in
efficiency. Farmers responded to extreme adversity, it is claimed,
by introducing cost-reducing innovations. The more inefficient
farmers were gradually forced out by a succession of crises from
which there was never time to recover, and those that were left
were, by definition, the fittest to survive. Perhaps the reduction
and rationalization of the burdens of the poor-rate and the tithe
also encouraged investment of capital in improved methods and
hence higher productivity. The Board of Agriculture had been
dissolved in 1822, but the Royal Agricultural Society of Eng-
land, first established in 1838, took its place in disseminating
ideas and information to farmers and was according to Ernie
'a powerful agent in restoring prosperity'. 1
Thirdly, it is evident that the rising rate of urbanization and
industrialization was bound to bring with it a reinforced
demand for the products of agriculture. Between 1821 and
1841 the net increase in the population of Great Britain who
lived in towns with 20,000 or more inhabitants, and hence could
not have contributed directly in any appreciable way to their
own food supplies, was nearly 2y million. However poor they
were, this represented a powerful demand for the staple foods.
In the late 1830's, as the railway age gathered its momentum,
it involved enormous wage-payments to sectors of the population
with a high propensity to spend their incomes on food and drink.
In the late 1830's a series of deficient harvests brought the
Corn Laws dramatically back into the political arena. In
September 1838 the Anti-Corn Law Association was set up in
Manchester and the great campaign was on. Repeal did not
come until 1846, when the most disastrous famine in modern
British history swept Ireland and forced the situation. Never-
theless the Anti-Corn Law League had already made political
history and had effectively prepared the ground for the capitu-
1
Ernie, English Farming Past and Present, p. 362.
lation. If the League could not have forced repeal without the
active co-operation of Sir Robert Peel and Lord John Russell
it was doubtful whether Peel could have done more than
suspend the duties without the propaganda efforts of the
League. Indeed the League was so successful that it succeeded
in converting not only a large body of contemporary opinion
but also the majority of succeeding economic historians to the
wisdom and justice of the case against agricultural protection.
It was essentially a middle-class organization. Control of its
activities was vested in a council of substantial subscribers, each
subscription carrying with it one vote. It was thus organized in
full sympathy with the principles embodied in the 1832 Reform
Bill, with the view that policy ought to be guided by the owners
of property. Its ideology therefore contrasted strongly with that
of Chartism, the other great reforming movement of the late
1830's and 1840's. This was a working-class movement which
sought to achieve economic justice by means of parliamentary
reform; and the six points of the People's Charter were:
manhood suffrage, vote by ballot, payment of Members of
Parliament, annual parliamentary elections, equal electoral
districts, and the abolition of the property qualification for
Members of Parliament. The Chartist revolutionaries, true
representatives of the working-class proletariat, suspected the
League because their enemies the manufacturers supported it,
and because they believed it was part of a conspiracy to keep
down money wages. But the Chartists—melodramatic, irreso-
lute, wild leaders of hungry men—lost their fight, and the
confident, moralizing respectable members of the Anti-Corn
Law League won theirs. 'The attack on the Corn Laws was
consciously planned on the model of the anti-slavery agitation,
the Corn Laws were attacked not only as an inconvenience but
as a sin, and a chorus of ministers of religion was invoked to
pronounce the anathema. ?1 The movement had large funds, an
efficient centralized office administration and a simple consis-
tency of purpose. In 1841 the decision was taken to contest
elections, and the League became a powerful political force,
focusing the aims of economists, manufacturers, and liberals of
every description; it carried with it the leaders of commercial
or industrial opinion and the intelligentsia of the new laissez-faire
1
G. Kitson Clark, The Making of Victorian England (1962), p. 38.
economy which commerce and industry was beginning to
recognize as its true interest.
Their opponents, they claimed, were the rich landlords and
the aristocrats. In fact, as Kitson Clark has shown, the strongest
objections to repeal came from the small farmers who felt that
their whole livelihood was at stake.1 The gentry and the
aristocracy were divided, for in practice they generally had
other interests and ambitions in trade and industry and they
did not find themselves wholly identified with the fortunes of
agriculture. Nor was there yet a strong strategic interest
involved. The British navy's control of the seas was undisputed
and Britain still supplied the bulk of her own foodstuffs. There
was no need to bolster up agriculture as an insurance against
total war and enemy blockade.
During the first half of the 1840's the success of the League
varied with the state of the harvests and of trade. There is
evidence that Peel, who had already shown himself in sympathy
with greater freedom of trade, was contemplating a revision of
the Corn Laws in 1845. But full repeal was an unlikely prospect.
In 1845 and in early 1846 the price of wheat varied between
455. and 59^., in spite of the failure of the 1845 potato crop. It
had been above jos. in the 1830's. It was when the Irish potato
harvest failed, and the British with it, and was accompanied by
a general failure of the harvest throughout Europe that the
situation became explosive. In 1846, faced with a difficult
political situation at home and harrowed by news of mass
starvation in Ireland, Peel decided that he must act. The Corn
Laws were swept away, without substitute other than a token
registration duty of n . a quarter on wheat. Cobden hailed
Repeal as a victory for the middle-class but Peel's motives had
been practical rather than ideological. 'I must be insane if I
could have been induced by anything but a sense of public duty
to undertake what I have undertaken in this session', he wrote.
The immediate result of Repeal was to break the social
tension that had been building up to explosion point in the
distressed decades following Waterloo. A resounding victory
had been won by the forces of liberalism and reform and there
was a kind of a lull in the overt conflict between rich and poor.
Chartist activity revived, it is true, with the return of depression
Ibid. p. 8.
in 1846, and in 1847 and 1848 the movement grew. It is
doubtful whether, even with competent leadership and a unified
purpose based on common interests, Chartism could have
achieved any influence in Whitehall at this stage. In the event
the Chartists presented hastily compiled petitions that were
doomed to be scorned, attempted strikes that were too ill-
prepared to be anything but fiascos and threatened govern-
ment with a force that was pathetically inadequate. There were
three main groups of workers who had a real stake in Chartism:
a small craftsmen group, the factory operatives of the textile
districts, and the domestic outworkers who ranged from the
hand-loom weavers to the nailmakers. It was extraordinarily
difficult to weld this heterogeneous collection of workers into a
unified political movement. All that they had in common was
that they were the losers in the great redistribution of incomes
that was involved in the Industrial Revolution; and when
economic growth gathered momentum on the scale that the
railway age made feasible, it became clear that it was not
possible to put the clock back. There were too many vested
interests in the new industry state, and not all of these were in
the upper income groups. So the Chartist movement collapsed
in the anticlimax that followed Repeal. The objective of a cheap
loaf meant more to the distressed working classes than the
vague Chartist aspirations to stand in the way of further
economic change.
Nor did agriculture find the expected disaster after Repeal.
True, there was an agricultural panic which swept through the
corn growers in the years of falling prices 1848-52, but to a large
extent this was a consequence of speculative activities which
Protection had encouraged. There had been speculation in
land, rents had risen to extravagant levels, and it was these
extravagances which came to grief with Repeal. Meanwhile the
British farmer was still effectively insulated from severe foreign
competition by geography. It was difficult to import large
quantities of corn from great distances without running up
heavy transport costs and there were few cheap sources of supply
outside Europe, where supplies were limited by local
restrictionist policies. At home the level of demand for the
products of agriculture and methods of cultivation was steadily
rising. Demand went up simply because population went on
growing. Between 1841 and 1851 the population of Great
Britain went up from I8J millions to nearly 21 millions, and
went on rising to over 23 millions in 1861. There was a vast
migration between country and town which, when added to the
high rate of natural increase of the urban areas, meant large
additions to the number of non-food-producers who had to be
fed. Between 1841 and 1851 over 700,000 people migrated into
the towns and colliery districts of England and Wales, and
between 1851 and 1861 over 600,000 more flooded into the
towns. By then, moreover, British farmers had reached what
seemed to be the limit of their cultivable acreage. The enclosure
movement was over. There were no more wastes and commons
which could be put to profitable use. On the other hand,
farmers who were willing to innovate, to put capital into
drainage and fertilizers, were assured of a huge and expanding
market. 'The age of farming by extension of area had ended:
that of farming by intension of capital had begun.'1
In the 1840's there were considerable advances in scientific
research on agriculture. The most urgent need of the moist
islands of Britain was for drainage, in striking contrast to many
modern developing countries where the need is for irrigation.
Drainage experiments perfected in the 1820's and 1830's led to
millions of acres being improved in the 1840's. The introduction
of a clay drainage-pipe in 1843 and of a pipe-making machine
in 1845 provided a cheap and effective conduit. 'Within the
next few years two large public loans for drainage. . . were taken
up and treble the amount was spent by private owners or
advanced by private companies.'2 Drainage gave the clay
farmers longer seasons and earlier, heavier crops; it raised their
yields and lowered their costs by permitting more effective use
of manures and fertilizers.
At the same time a new alliance between agriculture and
science was beginning to yield results of practical use to farmers
throughout the country. The German chemist Liebig published
in 1840 his famous book which set out the relations between the
nutrition of plants and the composition of the soil. The first
cargo of Peruvian guano had been shipped to Liverpool in 1835
and six years later the import was still only 1,700 tons. But by
1847 t n e importation amounted to 220,000 tons. Improving
farmers had begun to buy their fertilizing agents rather than
1 2
Ernie, English Farming Past and Present, p. 364. Ibid. p. 367.
2l6 THE FIRST INDUSTRIAL REVOLUTION
to rely on farm-produced manure; and the chemists and the

geologists were evolving new types of fertilizers. In 1843, f° r
example, Lawes set up a factory to produce superphosphate of
lime. A new attitude to farming grew up, not merely among the
owners of the great estates as in the eighteenth century but
among the mass of small farmers. A farmer who had paid good
money for fertilizers was unlikely to allow them to fertilize weeds
or to waste in undrained land. Whereas the old type small
farmers had been content to raise enough food to feed their
families and buy them the essential clothing and furniture they
needed from the manufacturing sector, the new farmer was
prepared to plough back part of his return into improving next
year's yield.
It must not be supposed however that all this happened at
once, that the results of scientific research were immediately
converted into successful innovations. There were many ex-
periments that failed, many farmers who applied unsuitable
fertilizers which did more harm than good or who wasted their
capital in sinking drains that were too deep. At the time of
Repeal high farming was still the exception rather than the rule,
and the majority of farmers made no more effort to increase the
productiveness of their land or to modernize their techniques
than their fathers had done before them.
Perhaps indeed it required the sharp shock of complete
abandonment of agricultural protection, and the wretched
years of falling prices which followed it, to put the British
farmers' opportunities and limitations in their true perspective.
Many tenant farmers got out in the years of depression and left
their farms on the hands of their landlords. But there is evidence
of a significant change in attitudes not only on the part of the
individual farmer, but also on the part of the large landowners.
It seems clear that those in charge of the large estates were
paying close attention to the best agricultural knowledge of the
day and were doing their best to pass this on to their tenants.
The Royal Agricultural Society (' the heart and brain of British
agriculture', according to Ernie) became a clearing house for
the best scientific research in agricultural techniques. An
expanding class of professional men—land-agents and solicitors
—managed the great estate on modern lines.
In effect, from 1853 onwards, the prospects for British
agriculture were seen to have changed radically for the better.
Fundamentally this was because of the improvement in tech-
niques and in the conditions of demand but, there were some
special circumstances in the early 1850's that set the industry
off on an upward trend. Expanding trade and manufactures
(stimulated by rising prices which were associated with the gold
discoveries) meant a swiftly rising demand for agricultural
products. The seasons were kind in the 1850's. The Crimean
War closed the Baltic to Russian corn. Rents rose, farming
profits rose and large sums were spent on drainage (money could
be borrowed for agricultural drainage under the Act which Peel
passed at the same time as the repeal of the Corn Laws) and
on agricultural buildings. The general level of farming rose
rapidly to the best standard of individual farmers in the
Protection era and the British agricultural industry reached the
all-time peak of its productive capacity. The decade 1853-62
has been called with reason ' the golden age of English agricul-
ture' and it was not indeed until the last quarter of the
nineteenth century that the industry began to feel the full effects
of the abandonment of agricultural protection.
In sum, it was in the second quarter of the nineteenth century
that the balance of power, economic and political, shifted finally
from agriculture to manufacturing industry. In the first three
decades of the century agriculture and manufacturing industry
gradually changed places in relative importance, measured by
the number of jobs they provided. Measured by the volume of
incomes generated the mining—manufacturing—building group
of industries had taken the lead in the years of agricultural
distress that followed Waterloo: and in the second quarter of
the century agriculture's contribution to the British national
product fell from a quarter to about a fifth.
The change in the balance of economic power was reflected
in and assisted by changes in the balance of political power. It
was the industrious middle classes—that comfortable army of
artisans, clerks, shopkeepers, merchants, bankers and indus-
trialists—that were the chief beneficiaries of industrialization.
The labouring poor in town and country, factory and farm,
suffered equally from harvest failure and trade depression, and
found it as difficult to keep their families fed and clothed as their
fathers and grandfathers had done in the eighteenth century.
It was not their day and their leaders could expect no more
response to their claims than riot squads, imprisonment and
2l8 THE FIRST INDUSTRIAL REVOLUTION
transportation. But for the middle classes it was a period of
political recognition and growing prestige. The aristocratic
leaders of government listened earnestly to the advice of
middle-class economists, and developed personal interests in
business and industry that were at least as important as their
interests in land and agriculture. The 1832 Reform Act did not,
as is sometimes claimed, put the middle classes in power in
Britain, but it did admit them to the electorate and it did
formally admit their right to influence economic policy. Their
supreme triumph, the result of their influence, was the repeal
of the Corn Laws. It was then that the right of the agricultural
industry for special treatment—a right that goes without saying
in a pre-industrial economy—was formally rejected by a com-
munity which had accepted the full consequences of the industrial
revolution.
Once the choice had been irrevocably made, the way was
open to the great international specialization of the late nine-
teenth century. When the railway and the steamship made the
fruitful prairies of North and South America accessible to the
British consumer, the numbers engaged in British agriculture
began to drop in absolute as well as in relative terms. Not until
that happened did the consequences of Repeal finally work
themselves out and industrialization become complete.
CHAPTER 13
THE ROLE OF GOVERNMENT
It is usual to regard the British industrial revolution as a

spontaneous event, and to the extent that the outcome of the
first industrial revolution was something which no government
could have been expected consciously to contrive it was indeed
spontaneous. But it should not be supposed therefore that
government's role in the process was entirely passive. On the
contrary, then—as now—the ineptitude or competence of
governments was an important fact in retarding or accelerating
economic growth. Changes in the conditions of supply and
demand under which the different industries operated, called
for, and produced, changes in economic legislation. Failure to
legislate could be as important as new legislation in assisting or
hindering the structural change which was essential to effective
industrialization.
One of the myths that has grown up about the industrial
revolution in England is that it happened in the absence of
rather than because of government intervention, that govern-
ment's role in the process was to efface itself as rapidly as
possible in order to allow private enterprise to pursue its
beneficent part in generating sustained economic growth. A
famous passage by Adam Smith, in a chapter advocating free
trade, provided the rationale for this legend by arguing that the
maximization of private profit by individuals involves the
maximization of national income.
As every individual. . . endeavours as much as he can both to employ
his capital in the support of domestic industry and so to direct that
industry that its produce may be of the greatest value; every
individual necessarily labours to render the annual revenue of the
society as great as he can. He generally, indeed, neither intends to
promote the public interest nor knows how much he is promoting it.
By preferring the support of domestic to that of foreign industry he
intends only his own security: and by directing that industry in such
219
a manner as its produce may be of the greatest value, he intends only

his own gain, and he is in this, as in many other cases, led by an
invisible hand to promote an end which was no part of his intention.1
This was the 'doctrine of the invisible hand'. Adam Smith used
it to justify free trade. His followers developed further the
philosophy of laissez-faire, the view that the business of govern-
ment was to leave things alone, and adopted wholeheartedly
the view that the unrestricted operation of private enterprise
was the most effective way of securing the maximum rate of
economic growth.
Two questions need to be considered in this connection. On
the one hand, how far was it true that the doctrine o$laissez-faire
was brought into full operation in the course of the English
industrial revolution? And on the other hand, was it true that
the British government's main contribution to the industrial
revolution was to leave things alone?
To begin with, then, did laissez-faire triumph? There is no
question at all that between 1760 and 1850 a mass of govern-
mental rules and restrictions on economic activity, many of
them dating from medieval times, were swept out of the statute
book. At the beginning of the period, for example, there was
a whole network of restrictions on the mobility of labour and
capital. By the Statute of Apprentices a person had to serve
seven years before he could follow a trade and there were
many local limitations on the number of apprentices. Adam
Smith, in a bitter attack on the privileges of corporations reeled
off an indignant list of them: ' In Sheffield no master cutler can
have more than one apprentice at a time. . .In Norfolk and
Norwich no master weaver can have more than two appren-
tices . . . No master hatter can have more than two apprentices
anywhere in England, or in the English plantations.' 2 The
wages of London tailors were subject to a legislatively prescribed
maximum which could be varied by the Justices of the Peace
at Quarter Sessions.
Then there were the laws which restricted the mobility and
use made of capital. The Usury Laws, for example, set a limit
of 5 per cent on the rate which could be charged for loans. The
effect of this was to divert capital from industrial and commercial
1
Adam Smith, Wealth of Nations (Cannan Edition), vol. i, p. 421.
2
Adam Smith, Wealth of Nations (Cannan Edition), vol. 1, p. 121.
THE ROLE OF GOVERNMENT 221
uses, where there were risks and the interest limits were too low
to compensate for the risks, to the government; for the
government was not subject to any legal restriction when it
made new issues, and the price of existing government paper
could fall to an extent which made its effective return to a
prospective investor exceed any commercial alternative. There
were also the laws regulating the organization of capital and
enterprise. The Bubble Act of 1720 prohibited the formation of
joint-stock companies except under special dispensation granted
only by Act of Parliament. ' I t has often been said that the
Bubble Act impeded for more than a hundred years the use of
large-scale manufacturing businesses in England.' 1 Then there
were the numerous regulations imposed by the Navigation Acts
which prohibited imports from certain countries except in
British ships, manned largely by British crews; and there were
the various foreign-trade monopolies held by the chartered
companies, though these were beginning to dissolve by the
middle of the eighteenth century.
In addition there existed a variety of regulations which
specified, often in meticulous detail, how things should be
manufactured or put on sale. The object was to exert some
control over their quality in the interests of the consumer at
home or abroad. Woollen and linen manufacturers for example
had, from time immemorial, to submit to a mass of laws
concerning the length and width and weight of the cloths they
made. Many of these had lapsed by the middle of the eighteenth
century—cotton manufactures, being relatively unimportant
until towards the end of the eighteenth century, were happily
free from such restrictions. But as late as 1765 an Act was passed
to control the quality of West Riding woollen cloth 'for
preventing frauds in certifying the content of the cloth and for
preserving the credit of the said manufacture at foreign markets'.
This Act ' provided a whole hierarchy of searchers, inspectors
and supervisors to certify the length and quality of the cloths,
to see to it that they had not been overstretched on the tenters'. 2
But 'older than the oldest regulations which had been laid upon
the manufacture of cloth, so old indeed as to be dateless—a kind
of economic common law—was the Assize of Bread'. 3 This
1
2
C l a p h a m , Economic History, vol. 1, p . 338.
3
Ibid. p. 338.
prescribed the weight and price of bread and the bakers'
margins, it legislated against adulteration and it prescribed that
bakers should keep legal weights and measures. Finally there
was the complicated system of Protection which placed a variety
of restrictions on the free flow of overseas trade. There were
absolute prohibitions of export (such as wool) and complete
embargoes on some imports (such as printed calicoes) and high
rates of duties on most others. In 1759 the standard rate of tax
on imports had reached 25 per cent and, in spite of William
Pitt's efforts to rationalize the tax system, the effect of the War
of American Independence and of the French wars was to push
up the effective level of duties.
Of course we should not fall into the trap of supposing that
the existence on the statute book of a mass of medieval
restrictions on economic activity meant that these restrictions
were effective. Take for example the apprenticeship laws. These
did not apply at all to new crafts not visualized in the original
Elizabethan Act, and some of the new towns were able to
escape them almost completely. Manchester, Birmingham and
Wolverhampton did so, for example. Moreover, where the
Statute of Apprentices was enforced it was often a source of
cheap labour or premium income to the employer rather than
a means of training craftsmen. William Hutton, for example,
'served his first apprenticeship in the silk mills of Derby starting
when he was too small to reach the machines without the aid
of wooden pattens fixed to his feet'.1 But this was no more than
child labour, for he did not learn the kind of trade that he could
practise as a man.
Nor, as Ashton has pointed out, did the Bubble Act hinder
the formation of joint-stock companies in industries where the
scale of operations made them particularly valuable.
It was still possible to set up a joint stock by private Act: the canal
companies were brought into being in this way. And the device of the
equitable trust under which mutual covenants were made between
subscribers and trustees nominated by them, led to a growth of what
were, in effect, companies in other fields of enterprise. All these had
a joint stock continuity of life and transferable shares; and late in the
century some of them found it possible to limit the liability of
members.2
1
D. Marshall, English People in the Eighteenth Century (1956).
2
A s h t o n , The Eighteenth Century, p . 119.
As for the Usury Laws, it is difficult to believe that they were

not often evaded in practice and easily too, by mutual consent,
wherever borrower and lender were both concerned to complete
the transaction on terms that equated the supply and demand
for loanable funds. In so far as a legally binding contract was
necessary it was easy enough for the borrower to undertake to
repay a larger sum than he had received and thus in effect to
pay a higher rate of interest than was formally recorded in the
the contract.
Similarly there were ways of evading the restrictions on
overseas trade. The prohibition on the export of wool was
regularly evaded by sending it to Holland or France via
Scotland or, more often still, by smuggling it out at night in
small boats to ships lying off shore. There were also ways of
getting wool out of the country by making it look like something
else (e.g. in bales of drapery) or in the luggage of passengers.
A flourishing smuggling trade flowed in the other direction too.
Valuable and relatively light commodities like tea, tobacco,
wines and spirits, lace, silk and printed calicoes probably came
in in larger volume in the smugglers' cargoes than they did in
the declared trade. The smuggler was a respected member of
the community. Adam Smith spoke of him, for example, as
a person who, though no doubt highly blameable for violating the laws
of his country, is frequently incapable of violating those of natural
justice, and would have been, in every respect, an excellent citizen,
had not the laws of his country made that a crime which nature never
intended to be so... Not many people are scrupulous about smuggling
when, without perjury, they can find any easy and safe opportunity
of doing so. To pretend to have any scruple about buying smuggled
goods, though a manifest encouragement to the violation of the
revenue laws, and to the perjury which almost always attends it, would
in most countries be regarded as one of those pedantic pieces of
hypocrisy which, instead of gaining credit with anybody, serve only
to expose the person who affects to practice them, to the suspicion of
being a greater knave than most of his fellows.1
How large the smuggling trade was in commodities subject
to high duties may be judged from what happened when the
import duty on tea was lowered from 119 per cent in 1784 to
i2y per cent. Within a year the amount entered for home
consumption had increased from under 5 million lb. to nearly
1
Adam Smith, Wealth of Nations, vol. n, p. 382.
T H E
i6y million lb. It had quite suddenly become unprofitable to

smuggle tea, which immediately began to flow through the
ordinary legal channels of trade in increasing volume.
In effect, then, many of the restrictions on economic activity
that were on the English statute book on the eve of the industrial
revolution were more tiresome than effective. The smuggler ran
the risk of forfeiture and heavy penalty, but with the rest of the
community on his side he stood a good chance of outwitting the
customs men. The apprenticeship and usury laws were more
often broken than kept. Many of the industrial regulations
would have required the apparatus of a modern police state for
their enforcement and were safely ignored. When the laws
regarding Yorkshire woollens were investigated by a Select
Committee in 1821 one manufacturer after another cheerfully
admitted to being a habitual law-breaker.
Moreover policy makers were becoming aware of the fact that
over-repressive measures defeated their own ends: a mild
regulation effectively enforced was more useful than a severe
restriction which no one respected. In the last two or three
decades of the eighteenth century, British manufacturers facing
expanding overseas markets, and increasing opportunities for
technical progress, had less incentive than ever before to lobby
for government interference with the free flow of international
trade. At the same time Pitt, anxious to improve the revenue-
yielding qualities of his import duties, began to replace some of
the prohibitive duties by taxes that slashed the smuggler's return
and diverted trade into legal revenue-earning channels. The tax
on tea was one example. By the time the French wars broke out in
the 1790's, British customs rates, though still high, were generally
quite moderate by contemporary standards for other countries.
The war, however, created an entirely new situation. On the
one hand, the excesses of the French Revolution and the present
national danger rendered the ruling classes more nervous than
they would otherwise have been and the laws against workers'
combinations were tightened up. On the other hand, the search
for revenue to meet war expenditures reversed the trend
towards a reduction in Protection. After the war the search went
on, for the unpopular wartime income tax was hastily dropped
and left a large gap in government revenue to be filled by
indirect taxation. British customs rates accordingly soared
during the war and its aftermath to reach in 1822 what must
have been an all-time peak of 64 per cent of the market value

of net imports. According to Imlah ' they became so much more
severe in weight and effect after the war that they constituted
virtually a new system'.1 There were chronic trade-deficits
throughout this period and it is reasonable to suppose that the
heavy burden of Protectionism in post-war Britain hindered
the recovery of British industry and intensified the social distress
involved in economic change.
The traditional explanation for what happened next was that
successive governments, recognizing the error of their inter-
ventions in economic affairs, inspired by Benthamite utilitarians
on the one hand and by the exponents of Adam Smith's doctrine
of the 'invisible hand' on the other, gradually relaxed the dead
weight of legislative restrictions on private enterprise and gave
the economy free rein. By 1850, so goes the story, the triumph
of the laissez-faire philosophy of government was virtually com-
plete in Britain.
What was the basis for this view? First of course, there was
the fact that a large number of restrictions on economic activity
and on the free flow of trade were reduced or removed. The
apprenticeship clauses of the Elizabethan labour law were
among the first to go in 1814. The East India Company had
lost its monopoly of the India trade in 1813, but because it
retained its monopoly of the China trade it continued to withhold
from British merchants, not only a potential market, but a key
point in a lucrative triangular trade—raw cotton and opium
from India to China and silver, silks, spices and tea from China
to Europe. This monopoly finally lapsed with the end of the
company's charter in 1834. A number of industrial regulations
were repealed in the 1820's. First the Yorkshire woollen-cloth
regulations were set aside, followed rapidly by the laws regu-
lating the Scots linen manufacture. Then in 1824 t n e Acts
' relating to the use of those hides in making boots and shoes and
for the better preventing the damaging of raw hides in the
flaying thereof were repealed. The bread regulations had a
chequered history in the post-war period; they were revived in
bad times and they decayed in good. Bread was relatively cheap
in the 1820's and the Assize was repealed in London in 1822;
it was moribund in the provinces though not finally repealed
until in 1836 an Act finally abolished the power and obligation
1
I m l a h , Economic Elements in the Pax Britannica, p . 115.
of the J.P.s to regulate either bakers' profits or the price of
bread.
The usury laws also came up for review in the post-war years.
During most of the eighteenth century the market rate of
interest on well-secured loans was below rather than above the
statutory maximum. But after twenty years of government
borrowing to meet the needs of a major war and twenty years
of the associated inflation, the market rate rose above 5 per cent.
It was the mortgage market that suffered by this, for the legal
formalities in a mortgage loan were of a kind that made evasion
difficult. The result was to add to the difficulties of landowners,
hard-pressed by the fall in corn prices. They were forced to
borrow from the insurance companies in roundabout ways
which meant in effect that they were subject to an interest rate
of 1 o per cent or more. A Select Committee reported in 1818 and
Ricardo, amongst others, testified to the fact that the usury laws
were generally evaded. But the market rate was already falling
and in the 1820's (except in the crisis of 1826) the statutory
limitation gave no real trouble to borrowers and lenders. The
Bank Charter Act of 1833 permitted the Bank of England to
disregard the usury laws and later the building societies were
permitted the same dispensation, so that when the usury laws
were finally repealed by Gladstone in 1854 they passed almost
unnoticed except by the mortgage market.
In some ways too the solutions which were found to the money
and banking problems of the post-war period represented a
movement in the direction of laissez-faire. On the one hand,
there was the relaxation of restrictions on joint-stock and branch
banking. On the other, there was the 'automatic' principle of
monetary policy which was eventually embodied in the Bank
Charter Act of 1844. For what Peel, acting under the inspiration
of the ' currency' school of thought, sought to do with this Act
was to set up a mechanism of currency control which was as
automatic as it would have been for a purely metallic currency.
In principle then, by raising or lowering the Bank Rate (and
hence contracting or expanding the note issue) in reponse to the
demand for the pound sterling, the Bank would be freed from
any active responsibility for currency control. All it had to do
was to obey the rules of the game, and these said quite simply
that if gold was flowing out of the country the money supply
should be contracted: and if it was flowing in it should be
expanded.
Some advance, too, was made in liberalizing labour relations
in the post-war decades. The Combination Acts passed in 1799
and 1800, when embryonic trade unions were seen as cover for
political agitation and subversive activity, were repealed in
1824, a s were the eighteenth-century laws preventing the
emigration of artisans and the export of tools and machinery.
But the strikes that followed the repeal of the Combination Laws
revived the government's anxieties and in 1825 (a year of high
food prices and serious labour unrest) a new Combination Act
was passed which, while it established the legality of workers'
associations for purposes of collective negotiation of wages or
hours of work, in effect forbade them to organize strikes.
The spectacular triumph of laissez-faire came, however, in the
field of foreign trade. What many people have in mind when
they talk of the triumph of laissez-faire in the nineteenth century
is the retreat from Protection and the adoption of a complete
free-trade policy. It was in this area of economic policy that
Adam Smith and his disciples were so sure of their ground and
were beginning to make headway before the end of the
eighteenth century. The trouble was, however, that war checked
their progress and in the aftermath of war it was not easy to
pursue a liberalizing policy; though people like Robinson at the
Board of Trade were aware of the fact that tariffs on imports,
for example, tended to choke off exports by depriving foreigners
of the purchasing power they needed to buy British goods. After
the experience of wartime food shortages the Corn Laws were
seen as a vital security measure and even the industrialists had
lost their nerve. So that although Huskisson made some progress
in the 1820's and Peel had laid the basis for a more extensive
reduction in the tariff system by his income-tax plans of the early
1840's, it was not until the Irish famine forced repeal of the Corn
Laws in 1846 that the retreat from Protection became an
irreversible movement. In just four years Peel had cut tariffs by
about 25 per cent and brought the average rate on imports
down to 21 per cent—not far above the 1790 rate. The process
he had started was carried on by his successors. In 1849 the
Navigation Acts were repealed and in 1854 foreign ships were
permitted to engage in the United Kingdom coasting trade.
Steadily the duties on the necessities of life were reduced or
abolished and free trade was effectively completed by the
budget of i860, which repealed the duties on 371 articles.
That the adoption of free trade was very much to the
advantage of British industry at this stage there is no doubt. By
the 1850's falling costs and prices in British industry and
agriculture made British producers almost invulnerable to
foreign competiton except in very special and unusual cases.
They were assured by their own superior efficiency of an
expanding share in world markets and by rising incomes and
population of an expanding domestic market. What mattered,
then, was that potential customers should not be starved of
purchasing power by restrictions on U.K. imports and that no
possible excuse for retaliation should be offered to those who
might be tempted to exclude British goods from foreign markets.
In sum, then, between 1780 and 1860 a great many restrictions
on economic enterprise were done away with. Was this really
due, as Arnold Toynbee would have had us believe, to the
triumph of the doctrine of the ' invisible hand' ? Did it reflect
the deliberate self-effacement of government in favour of a
policy of complete laissez-faire? Was the British government
really a passive agent in the British industrial revolution?
When we come to consider the motives and acts of successive
governments during this period the traditional interpretation of
the triumph of laissez-faire seems to be altogether too facile. For
one thing, many of the restrictions that were on the statute book
were of a kind which the government of the late eighteenth and
early nineteenth century was manifestly incapable of enforcing;
and the first restrictions to go were often those that were least
effective. A government without an effective police force or a
widespread political intelligence system could not enforce
regulations against combinations of employers or workers, nor
could it intervene effectively in establishing standards of quality
control. The cost of collecting an incoherent multitude of
customs duties was immense, and in many instances must have
outweighed the revenue that was extracted from an unwilling
and evasive people. When the profits of smuggling were so
evident and widespread it was unlikely that the scattered groups
of customs and excise men stationed along the English coastline
could have enforced many of the embargoes or prohibitive
duties. The first thing any government had to do if it was to
intervene purposefully in the conduct of economic affairs was
to come to terms with its opportunities and its limitations.
It was indeed as government took a more and more positive
and serious role in the economy that it began to streamline its
THE ROLE OF GOVERNMENT
administrative machinery, to jettison regulations that it had no
hope of enforcing, to formulate a considered view on what form
its interventions should take and to sharpen its powers in the
areas where it wanted to exert most influence. The beginnings
of a purposeful government economic policy can be traced back
to Pitt the Younger. Before the French wars came to substitute
a single aim of economic policy—victory—for the complex aims
of peace, he started out in all seriousness to rationalize the
government's finances. He experimented with a variety of new
taxes, he reduced certain prohibitive duties and thus diverted
the smugglers' profits into the national exchequer, he established
a sinking fund for the reduction of the national debt and ' he
preached as strict an economy in the public services as Gladstone
was to do in the middle of the nineteenth century'. 1
A quarter of a century of war and its aftermath, accompanied
as it was by radical changes in economic and social structure
and in the size and distribution of the population, transformed
the economic policy problems of government. By the 1820's
Britain was no longer a pre-industrial economy. It was a
changing, growing industrial complex in which the old moulds
of economic and social behaviour were being rapidly broken
before the new moulds had begun to set. Riots in town and
country spoke of increasing economic distress and an urgent
need for economic and social discipline which could only be
supplied by the central authority. It was no longer possible to
leave such matters to the J.P.s and the parish authorities. There
was need for a national economic policy evolved and applied
at the national level. This could only be provided by a central
authority with a clearer conception of its functions and respon-
sibilities then had been present for most of the eighteenth
century.
In effect then, the nineteenth-century government's role in
promoting economic well-being for the nation at large had to
be more deliberate and positive and was also more difficult than
it had been in pre-industrial times. This was so for a number
of reasons. First because the great war had put enormous
responsibilities on the central government. It had changed the
structure and purpose of the nation's economic activity and in
so doing it had given government a directive role. As in the great
1
Briggs, Age of Improvement, p. 118.
wars of the twentieth century, the lessons learned in the
practical experience of economic planning for victory were
important in conditioning the attitudes and techniques of the
post-war governments. Secondly the post-war dislocation was
as violent an upheaval as war itself and central government was
confronted unequivocally with its responsibilities in trying to
keep the economic and social fabric from disintegrating under
the strains then placed upon it. Thirdly it was by now evident
that industrialization brought with it acute social distress which
it was government's responsibility to alleviate. Fourthly it was
also evident that the regionalized economy of the eighteenth
century was becoming a national economy and this put addi-
tional responsibilities on central government. The growth of
cities and of factory industry meant that there were more and
more people for whom a slump implied absolute destitution: the
growth in the importance of international trade meant that
more and more often the causes of economic instability at home
were generated by conditions which might be affected by
government economic policy rather than, as in the past, by
climatic uncertainties and other Acts of God.
The British governments of the 1820's and 1830's were not
all equally competent in dealing with the economic-policy
problems with which they were confronted, but that they were
aware of them there is no doubt. They tried to evolve consistent
policies in the light of the teachings of the leading economists.
Among the audiences who heard McCulloch give the first
Ricardo memorial lectures were Huskisson, Canning, Peel and
Liverpool. They did not always take the undiluted advice of the
economists but they did realize more than any of their
eighteenth-century predecessors that the execution of the
appropriate economic policy required serious thought and
positive action.
So too did some of the civil servants who were concerned with
the implementation of economic policy. The personnel of the
Board of Trade, for example, was being chosen more and more
for its professional qualifications than for its personal and
political sympathies. This was another departure from the
eighteenth-century pattern where government officials had
characteristically been the lackeys of the landed aristocracy. It
was the beginning of a new kind of bureaucracy, an officialdom
from which today's professional civil service can trace direct
descent. Unlike today's bureaucracy, however, the Board of
Trade in the first half of the nineteenth century saw no need
to disguise its views on economic policy beneath a mask of
neutralism. 'In the eighteen-twenties the Board of Trade had
led the movement for commercial liberalism.'1 Its tradition of
dogmatic free trade left no doubt about where it stood in the
Corn Law controversy and in the final triumph of free trade
in the 1840's and 1850's. For reasons which were just as
doctrinaire, the Poor Law Commissioners of the early 1830's
made no attempt to be objective about their analysis of the
evidence on the operations of the old Poor Law. They believed,
with Malthus and the exponents of the Wages Fund doctrine
that the Speenhamland system of outdoor relief perpetuated the
poverty it was intended to relieve by depressing earnings and
stimulating the growth of population. Instead of analysing
systematically the results of the elaborate questionnaire that
they sent out to the parishes, they selected the facts and opinions
that supported their view 'so as to impeach the existing
administration on predetermined lines. . . what evidence they
did present consisted of little more than picturesque anecdotes
of maladministration'. 2
The fact was that as industrialization proceeded the state was
intervening more deeply and more effectively in the economy
than it had ever done before. There was indeed a revolution in
the technique and philosophy of government that was at least
as significant in shaping and accelerating the first industrial
revolution as the other transformations which we have come to
regard as part of it. It was of the same kind too. That is to say
it was a revolution in organization and behaviour and in the
personnel taking the effective policy decisions; it involved an
increase in the scale of operations and in the division and
specialization of labour; it was marked by a new readiness to
experiment with techniques and to make practical use of
developments in the natural sciences; and it developed a
self-sustaining momentum. These were the distinguishing
characteristics of the industrial revolution itself.
The odd thing was that a revolution in government which
represented the beginnings of collectivism and of the modern
1
Lucy Brown, Board of Trade and the Free Trade Movement 1830-42 (1958), p. 21.
2
Blaug, 'The Myth of the Old Poor Law and the Making of the New', Journal of
Economic History (1963).
welfare state should have taken place in a community whose
articulate political prejudices were flatly in opposition to such
a development. It happened because of the existence of strong
underlying pressures which proved in the end irresistible. There
were, for example, the ideological pressures associated with the
spread of utilitarian doctrines amongst educated people. These
looked on the face of them as though they were going to weaken
the power of the state, for they were in close sympathy with
Adam Smith's doctrine of the 'invisible hand' and were
constantly attacking the complicated and ineffective network of
government regulations which characterized the traditional
pre-industrial society. The real objiective of the philosophical
radicals, however, turned out to be not freedom from govern-
ment but freedom from inefficient government; and efficiency
meant effective and purposeful intervention in the economic
system as opposed to ineffective and aimless intervention. The
growth of humanitarianism was another factor in the situation
and so too were the historical events or revelations (the
epidemics, the shipwrecks, the recurrent human disasters) that
shocked this humanitarian feeling into an impulse of reform.
There was also the growth in scale and intensity of social
problems in a rapidly changing, rapidly growing economy, and
there was the growth of knowledge about possible ways of
dealing with these problems together with a growth in the sense
of social responsibility amongst those who had such knowledge.
These were the underlying pressures which ensured that a
generation reared in the doctrines of laissez-faire should system-
atically lay the foundations of modern collectivism.
The point of no return in this revolution in government seems
to have been reached in the 1830's. The duty of Government
to intervene in the economy on behalf of socially oppressed
groups had already been accepted. Hanway's Act to protect the
chimney-sweeps from exploitation went through in 1788. Sir
Robert Peel's Act to control the conditions of work of pauper
children was passed in 1802, and the 1803 Passenger Act laid
down a system of regulations for the protection of poor
emigrants. Moreover, in the decades immediately following the
Napoleonic wars, the initiative in evolving economic and social
legislation tended to pass from the dedicated private Member
of Parliament to government and the permanent civil service.
The Board of Trade was dominated by the economists who were
dogmatically sure that they knew what ought to be done about

overseas trade policy. The Benthamite utilitarians 'dominated
royal commissions and Parliamentary committees by their
superb confidence that they knew exactly and scientifically
what was to be done'. 1 Such developments were the beginning
of the retreat from laissez-faire; but they had as yet no revolu-
tionary consequences because they were completely ineffective.
Then in the 1830's the reforming legislation began to include
provision for inspection and enforcement by means of state
officials with executive powers. The first of these were the
factory inspectors. The 1802 Factory Act, which had achieved
little to protect the 'health and morals of apprentices' because
it had no enforcement machinery, was replaced by the 1833
Factory Act which set up a central authority and a subordinate
local inspectorate with powers to make and enforce regulations.
It was followed by a series of similar enforceable statutes
(chimney-sweeps in 1840, mines in 1842, ten hours 1847-50,
and so on) relating to workers' safety and education and
conditions of work generally. The first emigration officer was
appointed at Liverpool in 1833 to supervise the enforcement of
the passenger acts and to work with the local magistrate in
seeing that justice was meted out to offenders, and in 1834 six
other ports accepted emigration officers appointed by the
Colonial Office. These were the first of the expanding corps of
government inspectors who were to do much to enforce,
experiment with, and formulate social legislation in the nine-
teenth century.
In some spheres the developments of the 1830's went further
in the direction of bureaucratization than the nation was
prepared to tolerate permanently. The old poor law, for
example, which had left so much to the discretion of the local
authorities was replaced by a new poor law designed to
liquidate the problem of poverty by administrative action. In
this it did not succeed: the causes of poverty lay deeper than
the Poor Law Commissioners knew. But it represented a
revolution in social administration. It created a new set of local
government units in the form of the parish unions and it laid
down a nationally standardized policy of relief, imposed and
enforced by a set of bureaucrats with no parliamentary respon-
1
J. Bartlett Brebner, 'Laissez-faire and State Intervention in Nineteenth Century
Britain', in Essays in Economic History, ed. Cams-Wilson, vol. in, p. 256.
T H E
sibility. Relief was administered by boards of guardians
elected locally, but these were under the direct supervision of
the three national Poor Law Commissioners. The Poor Law
Commission lost its bureaucratic independence in 1847 when
it became the Poor Law Board under a responsible minister in
Parliament, but central government responsibility for preven-
ting social destitution had been irrevocably established. A start
had also been made with the business of organizing an effective
national health service, for the new poor law arranged for the
appointment of paid medical officers to unions or groups of
unions who gave free medical care to all aged and infirm and
permanently sick or disabled persons in receipt of relief. The
attempt to centralize the administration of public health which
was embodied in Chadwick's Public Health Act of 1848 also
went further than contemporary society could digest, and in
1854 'the forces of dirt and decentralization triumphed' when
Chadwick, the dictorial reformer was dismissed. But this was a
problem that could be and was dealt with at the level of the
big cities, which faced the problem in its most critical form. It
could also be supervised and guided more delicately at the
national level. The first Medical Officer of Health was appointed
in Liverpool in 1847, and when the General Board of Health
was abolished in 1858 its health functions were transferred to
the Privy Council with Dr Simon (an equally dedicated but less
overbearing reformer than Chadwick) as its adviser. In time
health inspectors were appointed to Simon's staff to travel the
country in order to see that the local authorities were complying
with the Sanitary Acts.
Nor was it only in the social sphere that government inter-
vention in the changing economy became direct and decisive.
British railways were built by private enterprise, but they were
supported and controlled by a whole panoply of state regulation
embodied in acts of Parliament. If the railway promoters
'could make out their case before a private bill committee, then
they were given, like the canals, that really great "interference
with property", the right to buy land compulsorily, subject
however always to elaborate safeguards—sworn and impartial
commissioners or a jury to see that the to-be-expropriated
landlord was not to be imposed upon'. 1 By the Railway Acts
1
of 1840 and 1842 a Railway Department of the Board of Trade
was set up and three officials were appointed to inspect the
operations of the railway companies and to prosecute them if
they failed to conform with the law. These inspectors had
freedom of access to all railway projects, the right to postpone
the opening of lines until they were satisfied with them and the
duty of deciding inter-company disputes about the management
of through traffic.
So too the Bank Charter Act, which by creating an 'autom-
atic' currency control system looks on the face of it like another
piece of laissez-faire legislation, was really another sphere in
which government used private enterprise as a tool but accepted
ultimate responsibility itself. When the governor and deputy
governor of the Bank of England, for example, were examined
by the Select Committee on Commercial Distress which sat in
1847-8, they agreed that the Bank Charter Act had relieved the
Bank of any responsibility for the circulation. It was their job
to follow a set of mechanical rules and government's job to step
in when the crisis was such that automatic adjustment failed to
restore equilibrium. The responsibility, they said, lay with the
law, not with the Bank. Even in the sphere of foreign trade
government was ready to take decisive action. The Foreign
Office, for example, accepted responsibility for the political
control of trade. When the Chinese took action against opium
smugglers in 1840 the British navy blockaded the Canton
estuary and in 1842 the Chinese had to admit British merchants
on the British government's terms. The church itself came
within the sphere of government action and was duly subord-
inated. The exclusive privileges of the Anglican clergy were
steadily whittled away and grants in aid of British education
went both to Anglican and non-Anglican schools in steadily
increasing amounts from 1833 onwards.
Nor was it only the central government that was strengthening
its power and its will to intervene in the conduct of private
enterprise. Local government, particularly the government of
the large new urban concentrations, began to assume wider
responsibilities in this respect. The social problems tended to
appear in their most acute form at the local level. It was on the
initiative of the mayor and corporation of Liverpool that the
Colonial Secretary appointed the first emigration officer, for
example. When the Municipal Corporation Act of 1835
reformed all existing corporations and extended the franchise
to all rate-payers it began to shift the balance of power from the
representatives of the pre-industrial economy to the middle-class
reformers. The change was effected more rapidly in some areas
than in others, but it meant that experiments in social control
could sometimes be adopted more readily at the local than at
the national level. This was particularly true, for example, of
the kind of intervention which was called for by problems of
sanitation and town improvement. It was at the local level that
government first began to regulate the activities of landlords
and speculative builders, who were turning the centres of the
great industrial cities into insanitary slums. The Borough Police
Act which Manchester Corporation promoted in 1844 imposed
standards of housing and sanitation which it took a generation
and more to enforce at the national level. In particular it
prohibited further building of back-to-back housing. Liverpool,
which had led the way by appointing the first British Medical
Officer of Health in 1847, w a s t>y i860 building houses for the
working classes out of corporation funds. The City of London
Sewers Act of 1851 prohibited cellar dwellings and the keeping
of live cattle in courts, permitted condemnation and destruction
of unwholesome property and established inspection of common
lodging-houses and properties let for under y. 6d. per week.
In the 1830's and 1840's, therefore, and still more in the
1850's the State was steadily taking responsibility for wider and
wider control of private enterprise in the interest of society as
a whole. To enforce the legislation of control a new division of
government was being built up, the executive arm, which
ensured that State intervention in the social and economic
affairs of the nation would be fully effective and which had a
kind of self-reproducing effect in that the experience so gained
was used to formulate new kinds of intervention and create more
executive officers to support it. Dr MacDonagh, describing the
development of this executive arm of government in the
emigration service, for example, has shown that by the middle
of the century the 'officers and commissioners not merely
requested and secured, they even anticipated legislation which
would award them the widest discretions and independence. . .
There could be no doubt now that the limit of State activity
was imposed, not so much by individualism, contract, free trade
or any other notion, as by the paucity of the human and
1
physical resources at the executive's disposal.' So far from
being triumphant by the 1850's, the laissez-faire movement had
been finally routed by new techniques of government control
of the economy which had their own built-in tendency to
develop, grow and multiply.
' Oliver M a c d o n a g h , A Pattern of Government Growth 1800-60 (1961), p. 345.
CHAPTER 14
ECONOMIC GROWTH AND
ECONOMIC CYCLES
The net result of the galaxy of revolutions in the way men

organized their economic life was that continuous economic
change came to be part of the natural order of things and that
the scale of the economy began to expand perceptibly and
without limit. It was within the century 1750—1850 that the
crucial transformation took place that led eventually to a
sustained growth in incomes per head. It is difficult at this
distance in time and with the sketchy statistical data at our
disposal to calculate precisely when this sustained growth
began, how much it amounted to and how rapidly it developed.
But analysis and interpretation of the existing statistical series
suggests a certain pattern, and this pattern is probably reliable
enough even if the precise figures are questionable.
Somewhere about the middle of the eighteenth century there
is evidence that total national output began to grow—perhaps
not faster than it had ever done before in earlier decades, but
certainly faster than it had over most of the preceding century.
At this stage, however, population had also begun to grow, and
it is doubtful whether output was growing any faster than
population at the beginning of the period, and hence whether
incomes per head were growing at all. In the last quarter of the
century, however, the evidence for an improvement in incomes
per head becomes much stronger, though it is still not conclusive.
We know that population and prices, and certain kinds of
production and incomes, and overseas trade, were growing
much more strongly than ever before in the fourth quarter of
the century. Our problem is to decide whether prices were
growing so fast that they outweighed any improvement in
incomes, or whether population was growing so fast that it
outweighed any improvement in production.
If we take money-income statistics as our starting-point in
trying to assess this growth and then adjust them for changes
238
ECONOMIC GROWTH AND ECONOMIC CYCLES 239
in the value of money with the aid of the existing price indices,
we find little evidence of growth in real incomes per head in the
last quarter of the eighteenth century and the first decade of the
nineteenth century. Indeed when we apply price indices to
national income or to wage data the results suggest a decline
in the standard of living over this period. But the problem is
that the rising price indices cannot be regarded as a reliable
reflection of the fall in the value of money because they are
incomplete, and moreover they are incomplete in a biased way.
In particular they are heavily weighted with commodities which
rose sharply in price (these of course were the prices which
contemporaries were most concerned to record), and exclude
many commodities whose prices fell (especially manufactured
products which being non-homogeneous commodities are not
in any case easily included in a price series).1 Hence the price
indices tend to exaggerate the fall in the purchasing power of
incomes at this period.
If however we take output and trade statistics as our starting-
point in trying to assess the national rate of economic growth
and make the assumption that foreign trade (which provides us
with our best continuous statistical series for the eighteenth
century) was of considerable importance to the economy, we
find convincing evidence not only of growth in total national
product but also in national productivity and standards of
living; that is, a growth in real incomes per head. In this
approach we avoid having to depend on biased price statistics
but, since we do not have enough production and trade statistics
to cover the whole economy, we have to make certain assump-
tions about the relative importance in the total national output
of the production and trade sectors whose growth we can
measure. Clearly we cannot get an accurate measure of the rate
of economic growth from these rough calculations but it is
reasonable to suppose that we can get answers of the right order
of magnitude.2
The results, then, are as follows. After a period of stagnation
1
The point is that although a ton of coal or a bushel of wheat can be regarded as
being much the same as between one price quotation and the next, a yard of cloth
or a piece of machinery may vary considerably in content and quality, so that the
quoted price of a manufactured good may reflect a change in the character of the
product.
7
The problems of making estimates of economic growth over this period and the results
used here are discussed critically in Deane and Cole, British Economic Growth. See also
N. F. R. Crafts, Economic History Review (1976).
in output, prices, population, incomes and standards of living

in the first part of the eighteenth century, there was a noticeable
upward trend in total national output dating from somewhere
about or just before 1750.1 At this stage, however, population
growth had begun to outweigh part of the improvement in total
national product and it is doubtful whether the improvement
in standards of living was appreciable enough to be obvious to
contemporaries. A considerably sharper upward trend appears
in the 1780's and 1790's when total national output may have
been growing at a rate of 1 -8 per cent per annum (approximately
twice the rate of growth in the middle of the century) and output
per head at a rate of about 0*9 per cent per annum. In sum,
when Adam Smith was writing he was looking back on a period
in which the rate of growth in the total national product would
imply its doubling in 70-80 years. This is not a fast rate of
growth but it should have been obvious to contemporaries that
the economy was in fact growing, and it is not surprising that
Adam Smith was conscious of national growth. On the other
hand, it is doubtful whether the improvement in standards of
living—which was proceeding at a rate implying a doubling of
the standard in about a century and a half—was very obvious
to contemporaries except in those sectors which were growing
fastest. But by the beginning of the nineteenth century the
growth in total national output was proceeding at a rate which
implied its doubling in not much more than 40 years and the
growth in incomes per head at a rate which implied its doubling
in 70-80 years. A significant feature of this end-of-century
acceleration in the rate of growth of incomes per head is that
it was accompanied by an acceleration in the rate of growth of
population. This is the justification for the importance which
economic historians have attached to the last two decades of the
eighteenth century. It seems to have been the period within
which the rate of growth in national product effectively out-
stripped the rate of growth of population and the spectre of
Malthusian stagnation was banished.
It seems likely that the national rate of growth was retarded,
though not actually checked, by the French wars, and that it
accelerated again in the 1820's and 1830's. So that as between
the first and the fifth decades of the nineteenth century total
national product seems to have been growing at a rate of about
1
See A. J. Little, Deceleration in the Eighteenth Century British Economy (1976), for a
discussion of the evidence for the view that there was a period of retardation in the
second quarter of the century.
ECONOMIC GROWTH AND ECONOMIC CYCLES 24I
2*9 per cent per annum (this implies a doubling in not much
more than a quarter of a century) and incomes per head at
about iy per cent (which implies a doubling in about half a
century). This was not yet the peak rate of growth achieved by
the British economy—that came in the second half of the
nineteenth century—but it represented sustained growth on a
scale which was beyond the wildest dreams of earlier generations.
The middle and upper classes certainly got a great deal more
out of this improvement than the working classes; capital got
a larger share than labour; some groups in the community came
near to starvation levels. But, when all allowance is made for
changes in the distribution of income which accompanied
economic growth, it can hardly be doubted that by the middle
of the nineteenth century the majority of the population were
beginning to experience, though not yet to expect, a slow rise
in their ordinary standard of living.
To say this is not to deny that the 1830's and the 1840's were
periods of widespread social and economic distress or that the
conditions of large sections of the population was at times as
bad—perhaps worse—than it had ever been before. The
'hungry forties' did not owe their name simply to the accident
of the Irish famine. Engels' passionate denunciation of the
industrial system was based on a biased selection of information,
but it was not without substance. The deplorable cases of
poverty and degradation that he cites were not by any means
uncommon. The fact is that economic growth was not a process
of steady improvement in standards of living for the mass of the
population. It was a process of economic and social change
which often left certain sections of the population very much
poorer in every sense than they had been in pre-industrial times,
and which made larger and larger sections of the population
acutely vulnerable to depressions in trade or industry or to
variations in the state of the harvest. Even those whose standards
of living were, on balance, improving, were subject to unpre-
dictable periods of unemployment or short-time which would
bring them face to face with destitution again. Engels recognized
this clearly enough. After citing three horrible cases of London
poverty he wrote:
It is not, of course, suggested that all London workers are so
poverty-stricken as these three families. There can be no doubt that
for every worker who is rendered utterly destitute by society there are
ten who are better off. On the other hand it can be confidently asserted
that thousands of decent and industrious families... live under truly

deplorable conditions which are an affront to human dignity. It is
equally incontestable that every working man without exception may
well suffer a similar fate through no fault of his own and despite all
his efforts to keep his head above water.1
There was one of the penalties of industrialization. At the
pre-industrial stage, where manufacturing was generally organ-
ized on a domestic basis, a trade depression would mean that
the average manufacturer had less money to spend, but not that
he would starve, for he could still work as an agricultural
labourer or cultivate his own plot of land. Similarly, when
harvests fell short of the normal the agricultural family could
often add to its income and so meet the higher food prices, by
working harder at the spinning wheel or the loom. By contrast,
in an industrial economy any state of depression, however slight,
is liable to involve unemployment for some workers and hence
complete destitution for them. Moreover in an integrated
industrialized economy where there is a high degree of special-
ization, there is inevitably a high degree of interdependence
between the different sectors of the community. A depression
in one branch of trade is liable to be communicated at once to
the ancillary and related occupations. Whereas in a traditional
economy, in which each region or family is accustomed to
produce a large proportion of its own subsistence requirements,
a depression in one sector has only limited effects on other
sectors, the reverse is true for an industrial economy. There a
loss of trade or a reduction in output in one industry affects the
prospects of a wide range of other industries and the chain of
bankruptcies and redundancies spreads rapidly, and often with
cumulative force, throughout the economy.
The fact is then that the process of economic growth is
overlaid by fluctuations in economic activity of varying severity
and length which have significant effects on the distribution of
incomes over time and between sectors of the economy. When
we try to assess rates of economic growth we deliberately look
past these ups and downs in order to arrive at estimates of
average rates of growth per head per annum. This gives us some
sort of unique measure of the long-term changes in product and
1
F. Engels, The Condition of the Working Class in England (1844), trans, and ed. W. O.
Henderson and W. H. Chaloner (1958), p. 37.
productivity which we can readily compare with similar
measures for other periods or other countries. But it is important
to remember that these calculations of rates of growth represent
an over-simplification of the data. We draw an imaginary
straight line, as it were, through the wavy line that represents
the annual changes in income or output per head for a given
economy. To complete the picture it is necessary to look directly
at the ups and downs and to analyse some of the cycles and
swings in British economic activity over the period 1750-1850.
There are of course a wide variety of kinds of cyclical
fluctuations in economic activity, ranging from the very short
to the very long. Within the space of a single year one can
distinguish the fluctuations which are dependent on the rotation
of the seasons. In a pre-industrial economy seasonal fluctua-
tions are generally more significant than in an industrialized
economy, partly because so much of economic activity is
concerned with agriculture, fishing, seafaring and building—all
of which are heavily influenced by climatic conditions—and
partly because one of the forms which technical progress takes
is the adoption of methods and equipment which permit a more
even utilization of capacity and labour and an even flow of
transactions throughout the year. In mid-eighteenth-century
England winter turned the roads into bogs, froze up the rivers
and hemmed the ships up in their harbours. Summer robbed
industry of its power by drying up the rivers and created
shortages of milk and butter. Most of industry was dependent
on the seasonal rhythm of agriculture, either because it processed
agricultural products or depended on labour released by the
slack periods in the agricultural cycle. 'The frost that killed the
sprouting corn, or the heavy rain that beat down the straw,
might simultaneously put a stop to the water-wheels or interfere
with the delivery of materials.' 1
The seasonal fluctuations are distinguished above all by their
regularity. Except that some summers are hotter (or wetter)
than others and some winters are colder (or drier) than others,
it can reasonably be expected that there will be a regular
alternation in climatic conditions which—give or take a few
weeks in either direction—will be predictably distributed
through time. Less regular, but none the less rhythmic in their
1
T. S. Ash ton, Economic Fluctuations in England (1959), p. 34.
T H E
incidence are the cycles that we call trade cycles and are
characterized by a succession of recognizable phases in economic
activity: revival, boom, recession, slump. Of these too one might
say that the intensity of each phase, the depth or height of the
fluctuation as between one cycle and the next, is variable; in
addition, however, the distance between boom and boom or
between upper (or lower) turning-points in the cycle also tends
to be variable. An analysis of English business-cycles since
1793—1857 suggests that the average length of a cycle was just
under 5 years, but there were two cycles in this period that last-
ed 3 years or less (1807—10 and 1829—31) and one which lasted
10 years (1837-47), so the range is quite wide.1
Two significant characteristics determine the outlines of a
trade cycle. First there is the initiating cause which sets on foot
an upward surge in economic activity or creates a crisis of
confidence and a downward turn; second there is the chain of
interaction which carries this disturbance from one sector to
another and into the heart of the economy. The more inter-
dependent the economy the longer and stronger is the chain of
the interaction and the greater the impact of the initial
disturbance on the total of national economic activity. It might
be expected, therefore, that the more industrialized the economy
became, the more significant would be the cyclical fluctuations
—more significant both in that they affected a wide area of
economic activity and in the range of the upward and
downward fluctuations in economic activity that could be
generated by a given impulse. This does indeed seem to have
been the case. That is to say, the nineteenth-century English
cycles are more pronounced, more continuous and more easily
distinguished than the eighteenth-century cycles. But it should
be remembered that we do not have annual indices of total
economic activity for the eighteenth century and before, and
hence that we cannot recognize the shape of the cycle: we can
only identify it in terms of the crisis; that is, the upper
turning-point.
Financial crises or panics reflecting the upper turning-point
of a cycle can of course be traced back to the seventeenth
century. Notably, for example, there was one in 1667 following
the great fire of September 1666; another in 1672 caused by the
1
W. L. Thorp and W. C. Mitchell, Business Annals (1926), p. 45.
Dutch war; and another in 1696, soon after the foundation of

the Bank of England, also associated with wartime difficulties.
The crisis of 1708 can be traced to political difficulties, and the
South Sea Bubble panic of 1720 was the culmination of a
ludicrous indulgence in speculation. The result so chastened the
speculators that the financial situation of the economy remained
undisturbed until in 1745 Bonnie Prince Charlie invaded
England, got as far as Derby, and precipitated a currency, bank
and stock-exchange crisis before his expedition collapsed. In
1763 there was another crisis ending the boom which followed
the Seven Years War. In 1772 the failure of an important
banking house caused a severe panic. The American War
brought a deep trade depression, and was followed by an
excited boom which collapsed in 1783 with another financial
panic.1 The next panics took place in 1793 at the outbreak of
the French wars and in 1797 on the occasion of a naval mutiny.
Contemporary economists in the late eighteenth and early
nineteenth centuries were well aware of these recurrent events
but they found no theoretical interest in them. Classical econo-
mists from Smith to Mill regarded business depressions and
booms as being attributable to causes lying outside the range
of their economic science (to speculative frenzies, for example,
or to wars or to technical change) and they therefore did not
attempt to analyse them in any detail.2 Ricardo, for example,
referred to the ' temporary reverses and contingencies produced
by the removal of capital from one employment to another', 3
but he did not recognize the cyclical characteristics of these
events. Indeed while the crises were associated so obviously with
particular outside causes such as wars, technical changes,
harvests, speculative manias, etc., there was no obvious need to
explain them.
In effect, then 'until the regularity of the disturbances was
established. . . their explanation was no challenge to theoretical
economics'.4 Even when their regularity was recognized, in the
second half of the nineteenth century, the tendency was to
explain the cycles in terms of non-economic causes. W. Stanley
Jevons, for example, the first British economist to recognize the
1
Thorp and Mitchell, Business Annals, p. 150.
2
S. D. Merlin, The Theory of Fluctuations in Contemporary Economic Thought (1949), p. 17.
3
D . R i c a r d o , On the Principles of Political Economy and Taxation ( 1 9 5 1 ) , e d . b y Piero
Sraffa, p. 263.
4
S. Kuznets, Economic Change (1954), p. 4.
rhythmic character of prosperity and depression phases,

attributed them to solar cycles. He observed that there were
sixteen cycles in English trade over the period 1721 to 1878, each
of which accordingly could be given an average length of 10466
years, and he compared this with the length then assigned to
the sunspot cycle which was 1045 years. From this of course
it was a short step to argue that the two were related. Since then
doubt has been thrown on the length of the sunspot cycle, which
seems to be more often 11 years, i.e. more than 103-, and on the
length of the business cycle, which seems to be appreciably less
than 10. Nevertheless, the sunspot thesis has been revived in
different forms since, though not very convincingly for the more
recent (late-nineteenth-century and twentieth-century) cycles.
Clearly, however, since it has been established that there are
crop and weather cycles, these may well have produced sym-
pathetic commercial cycles in pre-industrial economies, when
agriculture was the chief economic activity and both trade and
industry depended heavily on the fortunes of agriculture. Sir
William Beveridge, for example, studying European wheat
prices over a period of three centuries from 1545 to 1844, found
evidence not of one or two but of many cycles in the weather.
He concluded that 'Somewhere or other in the solar system
there are periodic movements affecting our weather and crops,
10 or 20 or more in number, far more regular than had ever
been believed, possibly approaching in some cases the regularity
and persistence of free orbital motion, subject in other cases to
sudden birth and death.' 1
However sceptical they might be of solar theories of the trade
cycle, however, most economic historians would agree in
attaching considerable weight to theories which stress the
influence of harvests on levels of economic activity, especially
in periods when agriculture was the major industry; and for the
whole of the period we are now considering, 1750-1850,
agriculture was the premier British industry. It probably
absorbed about half of the country's labour force in 1750 and
more than a fifth even as late as 1850; it provided most of the
nation's food: indeed in 1750 it made an important contribution
to the nation's export trade, while by 1850 the state of the
harvest was a major factor in the level of imports and
1
Sir Wm Beveridge, 'Wheat Prices and Rainfall in Western Europe', Journal of the
Royal Statistical Society (May 1922), p. 452.
hence—through its effects on the balance of trade—on the state

of credit in general.
It is easy to see that abnormally good, or bad harvests could
create pervasive and intricate repercussions on the economy of
eighteenth-century England. Most eighteenth-century indus-
tries depended directly on agriculture for their raw materials;
most eighteenth-century consumers had an inelastic demand for
the large food component of their budgets and an elastic
demand for manufactures. The output of starch, spirits, malt
and beer, for example, tended to fluctuate with the output of
certain cereals; the output of the leather, candle and soap
industries was closely tied to that of the livestock industries; the
profitability of the woollen or linen industries hinged on the
price of raw wool or flax. When harvest conditions were such
as to produce a general dearth of agricultural products the
wide-ranging consequences of the event would include: (i) a
rise in raw-material costs for a large number of industries; (2)
high food prices and unemployment for agricultural workers
and hence reduced purchasing power for industrial products;
(3) budget deficits due to a decline in the output of commodities
subject to excise (most of which were processed agricultural
commodities) which reduced government revenue, together
with a rise in the food bill of the armed forces which increased
government expenditure; and (4) an unfavourable balance of
trade due either to a reduction in the exports of agricultural
products or to an increase in the imports of food.
Thus, indirectly or directly, a bad harvest could be expected
to reduce levels of income and industrial activity and to shake
business confidence in the eighteenth century.1 Moreover, the
climatic aberrations responsible for harvest failures would often
be compounded by their simultaneous effects in certain non-
agricultural activities—such as building, transport or mills
generating water-power—all of which would be hindered by
bad weather conditions.
Of course there were other reasons for the fluctuations in
English economic activity in the eighteenth century, as Ashton
has pointed out. War, for example, was a powerful factor in the
1
The longer-term effects of a sequence of good or bad harvests would of course depend
on what happened as a result of the associated redistribution of incomes between
farmers or landlords (disadvantaged by low and benefited by high agricultural prices)
and the rest of the community. See above, pp. 131-4 and 207-9 for further discussion
bearing on this point.
fluctuations in overseas trade. When war seemed imminent, the

tendency was for exports to rise faster as merchants hastened
to get goods shifted before the expected interruption in the trade
routes. Exports were stimulated for this kind of reason in 1701,
1743, 1756, 1774-5 a n d J 792. Once a war had broken out and
the seas were infested by hostile ships, imports tended to be
discouraged, though exports were often maintained by govern-
ment expenditure abroad. As wars ended and normal com-
mercial contacts were resumed, both exports and imports tended
to expand.1
We may reasonably ask ourselves whether the eighteenth-
century trade cycles, shaped largely by climatic shocks or wars,
were really the same kind of phenomenon as the nineteenth-
century cycles. Certainly they seem to have been less regular
either in their incidence or in their pattern. Though there were
some crises which seemed to have originated largely in a
financial situation, such as the crises of 1720, 1763, 1772/3 and
1788 (all of which were international), there were few
eighteenth-century cycles that were not conditioned more by
political events than by economic events. There was little to
suggest that prosperity, boom, slump and recovery would
continue to succeed each other in inevitable sequence. But
before we write off the eighteenth-century fluctuations, how-
ever, as being disconnected up-swings and down-swings attri-
butable mainly to harvests or wars or political events rather
than self-perpetuating cycles, it is worth remembering that our
information for the eighteenth century is very scanty and that
such annual series as we have cover only limited sectors of
economic activity. When Sir William Beveridge wrote his classic
work on unemployment he concluded that before 1858 it is
impossible ' to find a cyclical fluctuation of trade in the sense
in which such fluctuation is found later, as an influence
dominant alike over finance and trade in the narrow sense and
over industry and the whole economic life of the nation'. 2 But
some years later when more data became available he compiled
an index of industrial activity which suggested cyclical fluctu-
ations that looked distinctly modern in rhythm and amplitude.
1
Ashton, Economic Fluctuations in England 1700-1800, p. 64.
2
Sir Wm Beveridge, Unemployment: a Problem of Industry (1912), p. 342. See also J. Parry
Lewis, Building Cycles and Britain's Growth (1965) for the evidence for the existence of
the building cycle.
For the nineteenth century, however, the analysis of business

cycles has now been carried much further. The period 1790-1850
has been the subject of an exhaustive inquiry by an American
trio of research workers, Gayer, Rostow and Schwartz, and the
results of their researches have been published in a two-volume
monograph which explores the character and causes of British
trade cycles in immense detail.
The main conclusion reached by Gayer, Rostow and
Schwartz was that the cycles in British business activity which
can be recognized in the period 1790-1850 were dependent on
two main factors on the side of demand: first the fluctuations
in the demand for British exports (particularly for textile
exports), and secondly fluctuations in domestic investment.
These two factors were interrelated in that an expansion in
domestic investment generally followed an increase in exports
and when both factors were present in force they generated a
major cycle. Within the period 1790—1850 these authors trace
six major cycles (1797-1803, 1808-11, 1816-19, 1819-26,
1832-7 and 1842-8) and a number of minor cycles in which the
expansion of exports was not great enough to stimulate an
expansion of domestic investment but nevertheless produced a
recognizable cycle of general business activity.
The generalized picture of expansion which emerges is of recovery
begun by an increase in exports and, after a period, supplemented by
large-scale domestic investment. It is probable, further, that these two
sources of new orders to industry were related. The primary and
secondary (multiplier) effects on total income, due to the increase in
exports in the early stages of revival, helped to induce and to finance
the later construction of capital equipment.1
In effect, they argue that an expansion of the demand for
exports produced three effects, each of which encouraged new
domestic investment: (1) a condition of full capacity in some
sectors, (2) an expectation of continued increase in output, and
(3) an increase in profits. Each of these tended to stimulate an
expansion of domestic investment. Of course it was necessary,
if the cycle was to have its modern form and to characterize
business activity as a whole, rather than particular sectors of the
economy only, that the reactions should be fairly pervasive.
1
A. D. Gayer, W. W. Rostow and A. J. Schwartz, The Growth and Fluctuation of the
British Economy 1790-1850, vol. 11 (1953), p. 534.
When the increased export demand was concentrated on a

particular industry it was necessary, if a major cycle was to
develop, for this to create a climate of confidence over a wider
area and set cumulative effects in motion through the tendency
of businessmen to assess their prospects in terms of a national
rather than a parochial development. There seems little doubt
that this tendency for businessmen to think and act in step—
which is one of the most significant characteristics of the
modern trade cycle—increased as communications improved
and as the national market for both goods and capital became
more integrated. It is very much in evidence in the cycles of the
'twenties, 'thirties and 'forties of the nineteenth century. Gayer,
Rostow and Schwartz, for example, see conditions in the
money-market as being mainly responsible for the rapid spread
of business confidence or pessimism which characterized the
post-1820 cycles. In the expansion phases it was relatively easy
to raise money, and confidence was therefore high. 'This
increase in entrepreneurial daring (both in industry and in the
long-term capital market) can be traced clearly in the major
cycle expansions of the last three decades of the period. . . Even
in the relatively atomistic economy of Britain in the early
nineteenth century, entrepreneurs made their judgements
about the future on the basis of pervasive conditions.'1 In sum,
while we may reasonably reserve judgment, pending further
research, on whether the eighteenth-century fluctuations in
economic activity were cyclical in the sense of the modern
trade-cycle, there seems to be good reason to regard the trade
cycles which had their peaks in 1825, l^3^ a n d ^ 4 5 respectively
as being essentially modern in form.
The short-term fluctuations that we call trade cycles, however,
are not the only rhythmic movements that economists have
recognized in the statistical series which reflect national and
international economic activity. In 1913 the Dutch economist
van Gelderen claimed to have discovered the existence of'large
cycles' in economic development lasting about 60 years; and
in the 1920's the Russian economist Kondratieff developed
independently his theory of the long waves in economic life.2
These long waves were apparently superimposed on the trade
1
Gayer, Rostow and Schwartz, Growth and Fluctuation, vol. n, p. 558.
2
N. D. Kondratieff, 'The Long Waves in Economic Life', Review of Economic Statistics
(1935)-
ECONOMIC GROWTH AND ECONOMIC CYCLES 25I
cycles in the same way as the latter were superimposed on the
seasonal cycles which make up each year. KondratiefF analysed
historical price and production data for a number of western
countries—Britain, France, U.S.A. and Germany—and con-
cluded that the western world had seen 2? 'long waves', each
of 50 to 60 years in duration, since the closing years of the
eighteenth century. The first he traced from its beginning in the
1780's or early 1790's through its crest in 1810-17 and down
to its trough in 1844-51; the second ended in the 1890's.
Kondratieff merely reported on the evidence of the statistical
series. He made no attempt to explain the long waves that he
found, but he did insist that they represented regular rather
than random fluctuations, and he did give it as his opinion that
' the long waves arise out of causes which are inherent in the
essence of the capitalistic economy'.1
It was left to Schumpeter to suggest an explanation for the
long waves and to interpret them in a historical context.
Schumpeter argued, as Kondratieff had done, that the cyclical
nature of economic development was inherent in the capitalist
system: and he began his argument, as Kondratieff had done,
with the 1780's. Nevertheless, he also claimed to see evidence
of earlier swings, though he saw these as somewhat muted by
comparison with the later waves simply because the capitalistic
system of economic organization was less well developed. 'The
smaller the capitalist sector embedded in an otherwise
precapitalist world, the less the fluctuations characteristic of the
capitalist process will assert themselves and. . . external factors
(harvests, wars, plagues, etc.) will dominate.' 2
Briefly, Schumpeter's interpretation is based on his theory of
innovations. A major innovation always stimulates a cluster of
related innovations and completely changes the range of
opportunities open to a certain group of industries. While
entrepreneurs are taking advantage of these innovations for the
first time and adapting themselves to the changed economic
circumstances which they involve, the economy tends to be
prosperous and expansive. Within the up-phase of the long wave
there may be occasions in which entrepreneurs tend to overshoot
the mark and when over-speculation causes crises and
temporary recessions; the ordinary trade cycle, that is to say,
1
A.E.A., Readings in Business Cycle Theory, p. 42.
2
Schumpeter, Business Cycles, vol. 1, pp. 224-5.
continues to operate, but it is of the essence of the upward
section of a long wave that years of optimism and expansion are
more frequent than years of contraction or depression. In time
of course, the repercussions set up by a particular major
innovation die away, prices fall faster than costs and the long
wave enters into its down-phase, when years of contraction and
depression are on balance more frequent than years of
optimism.
The first long wave analysed by Schumpeter in these terms
runs from 1787 to 1842. This was the long wave which
coincided, more or less, with the Industrial Revolution. It was
set off, according to Schumpeter, by the innovations in the
cotton industry, supported by innovations in the iron industry
and by the advent of the steam-engine. Its up-phase coincided
with the period when the cotton and iron industries were
growing at a spectacular rate from small beginnings. It turned
downwards in the depressed aftermath of the Napoleonic wars.
During the 1820's and 1830's the long wave continued down,
while the cotton and iron industries, now relatively massive,
grew more slowly on the strength of past innovations. It turned
upwards again in the railroad boom of the 1840's when
steam-power began to be used on a large scale for transport, for
the weaving section of the cotton industry and for other textile
industries, and as the coal and iron industries surged upwards
in response to the new demands being made upon them. This
second long wave, stretching from 1842-1897, was the age of
steam, steel and railways.
It is clear, then, that British economic growth has developed
not by a steady expansion of economic activity but in a
fluctuating way. It is clear also that some of these fluctuations
have a rhythmic quality and take the form of a series of cycles.
I have chosen to mention only three kinds of cyclical fluctuation
—the seasonal cycles completed within a single year; the trade
cycles (sometimes called Juglar cycles after an economist who
analysed them) generally completed within a span of under 9
years (they averaged about five in our period); and the long
waves (Kondratieffcycles), which stretch over a period of 50-60
years. Statistical analysts have drawn attention to many more
rhythmical regularities in the various aspects of economic
activity, but all of these regularities, except the strictly seasonal,
show up more clearly and intelligibly after the middle of the
nineteenth century than in earlier periods. It is not merely that

the statistics for the later period are more complete and reliable
(though this of course is true) but also that the national
economy which grew out of the industrial revolution was
characteristically prone to self-generating cycles in income and
output.
There were a number of reasons for this, all of them arising
from the fact that an industrialized economy is more closely
articulated, less atomistic, than a pre-industrial economy. The
more capitalistic the economy became, the more it was subject
to alternating periods of prosperity and depression as innovating
entrepreneurs optimistically imitated each other in building up
capacity until it outstripped demand, and then subsequently
abstained from further investment, until their collective pessi-
mism was dispelled by new opportunities to innovate in face of
a demand for goods which was growing appreciably faster than
supply. Specialization of industry meant the growth and
ramification of highly interdependent industries. The more
the economy moved away from dependence on traditional
agriculture with its strong seasonal rhythm, and the more it
came to depend on the fortunes of mechanized industry, the
more likely it was to find the level of demand fluctuating in time
with the age cycle of man-made assets in general use. When an
interruption in the path of industrial growth (due, perhaps, to
an exogenous cause like an invention or a war) induced a sudden
increase (or decrease) in the rate of expenditure on certain
machines or vehicles the probability was that the increase in
capacity would discourage further investment until, at some
later date, the wearing out of assets concerned concentrated a
new burst of demand, and set the cycle off again.
Geographical integration of the economy also helped to
generate, or at any rate to emphasize, cyclical fluctuations in
economic activity. The more nationally integrated an economy
became, the more likely was it that regional cycles in optimism
or in opportunity would synchronize so as to produce a national
rhythm that was more emphatic than any of its components.
It is significant, in this context, that the 20-year building cycle
which is so marked a feature of the British statistical indicators
in the later nineteenth century fails to show up at all clearly in
the earlier data, although it is there at the regional level. It has
been observed, for example, that 'the first half of the nineteenth
T H E
century was marked by regional building cycles somewhat out
of phase with each other'. 1 Integration at the international level
also helped to set up a more emphatic rhythm in national
fluctuations of economic activity. Specialization of industries as
between countries was another characteristic of nineteenth-
century industrialization and as nations became more and more
dependent on trade with each other they became more
vulnerable to disturbances arising in each other's economies.
When two or more national trade cycles fell into step they
produced more emphatic fluctuations than the component
cycles would have generated in isolation.
Whatever the reasons, however, the consequences of this
tendency for cyclical fluctuations in output and incomes to
intensify in the course of industrialization were generally unfor-
tunate. The industrial revolution subjected a low-income
community to a fluctuating type of economic growth in which
the down-swings were prolonged and painful for the proletarian
sectors of the population. Of course it was not only the working
classes who suffered from the growing instability of the economic
system. In bad years the number of bankruptcies rose to
alarming levels. 'John Kennedy, himself a successful cotton
spinner, remarked that at the end of the French wars not more
than seven cotton mills in Manchester were under the same
management as at the beginning. ' 2 But whereas the landowners,
the capitalists and the middle classes could usually husband
enough of their abnormal earnings in the up-swings to cushion
their standards of living in the down-swings, the proletariat
swung helplessly between destitution and sufficiency. Until
average productivity had risen high enough to lift the mass of
the working classes so far above subsistence levels that even the
periodic downward fluctuations in national income did not dip
them below the poverty line, and until the weight of the public
sector had become so powerful a factor in the economy that
government could largely compensate for a decline in private
demand with a rise in public demand, industrialization meant
an insecure as well as a rising standard of living for the majority
of the people.
1
J. Parry Lewis,' Indices of House Building', Scottish Journal of Political Economy (1961),
p. 154.
2
Donald Reed, Press and People iygo-1850 (1961), p. 20.
CHAPTER 15
STANDARDS OF LIVING
Economic growth and economic change involve an expansion

of the flow of goods and services produced in the economy and
change in its composition. One way of assessing the achievements
of an industrial revolution therefore is to measure its conse-
quences in terms of their effects on standards of living. It might
be expected that the process of industrial revolution, bringing
with it, as it does, a great lowering in costs of production both
in agriculture and industry, a perceptible reduction in the
amount of human effort required to produce a given unit of
output and a consequent increase in the flow of goods and
services available for consumption would automatically involve
a corresponding rise in the standard of living of the working
man. Whether or not it does have these consequences, however,
depends on a variety of circumstances, not least of which is the
rate of population growth. It is rapidly becoming apparent in
today's newly developing countries, for example, that even
assuming a fairly brisk rate of technological progress in industry
it is only too easy for the number of mouths to be fed to multiply
more rapidly than productivity per person in active
employment, and hence for the average standard of
consumption to fall. If the rising population is due, as it
frequently is, to a higher birth rate or a lower infant mortality
rate it brings with it a larger dependent population and a smaller
proportion of the total population in active employment. And if
technical change begins, as it frequently does, in industries
employing a relatively small section of the labour force rather
than in, say, agriculture in which a majority of the labour force
is engaged, it will have to be very rapid indeed to raise the
output of goods and services fast enough to compensate for those
factors which are tending to depress average consumption
levels. Moreover, if there are important discontinuities in the
development process such that the growth of new kinds of
255
industry requires substantial initial expenditures on new capital

assets (buildings, harbours, roads, canals, railway-lines, ships
and vehicles, plant and machinery) before incomes begin to rise,
current consumption may actually have to be reduced so that
funds can be diverted to these capital expenditures.
In effect, the evidence suggests that some countries have
experienced a period of what has been called a 'swarming' of
the population in their early stages of industrialization, a period
within which the numbers of the people increased faster than
productivity and the flow of consumer goods per head actually
declined for a time. It is therefore of special interest to ask
ourselves whether the English experience included such a period
and, if so, when it occurred.
Actually it is quite difficult to produce a conclusive answer
to this question and in fact one of the most persistent contro-
versies in the history of the industrial revolution is the argument
that has raged around the workers' standard of living. Two
schools of thought have grown up in connection with this topic.
The pessimistic view, held by a long line of observers from
contemporaries of the process to modern historians—by Engels,
Marx, Toynbee, the Webbs, the Hammonds and a host of
others, more recently Dr Hobsbawm—is that the early stage of
industrialization in England, though it brought affluence to
some, caused a net deterioration in the standard of living of the
labouring poor. The optimistic view, put forward by an equally
long line of observers—by McCulloch, Tooke, Giffen, Clapham,
Ashton and more recently Dr Hartwell—is that although
economic change left some workers displaced and distressed, the
majority of them were enabled by falling prices, more regular
employment and a wider range of earning opportunities to
enjoy a rising standard of living.1
The controversy has been muddied by political prejudice and
the myopic views to which prejudice so often gives rise. It is
common to find left-wing writers, their sympathies strongly
engaged by the sufferings of the proletariat, holding the pess-
imistic view; and is equally common to find right-wing writers,
more confident of the blessings assured by free capitalistic
enterprise, holding the optimistic view. Engels, whose Condition
1
For a review of the issues in the debate, reprints of some of the significant articles
and a useful select bibliography, see A. J. Taylor (ed.), The Standard of Living in Britain
in the Industrial Revolution (1975).
STANDARDS OF LIVING 257
of the Working Class in England (originally published in 1844 and

translated by Henderson and Chaloner) is one of the most vivid
and angry denunciations of the factory system, made no bones
about his political motives. In a letter written to Karl Marx he
called his book ' a bill of indictment'. 'At the bar of world
opinion', he wrote, ' I charge the English middle classes with
mass murder, wholesale robbery, and all the other crimes in the
calendar.'1 The theory of deterioration was buttressed by a
somewhat legendary picture of the golden age that was supposed
to have preceded the industrial revolution—an England of
happy prosperous yeomen and independent domestic craftsmen
free from exploitation and care. But in fact the domestic
outworker was no less exploited by the master-manufacturer
who supplied his family with cotton to spin, or yarn to weave,
than the factory worker by the owner: and women and children
often worked as long hours at the laborious process of domestic
industry as they ever did at the factory machines.
The argument has been further complicated by the intro-
duction of 'moral' and 'aesthetic' and other non-economic
considerations. The Hammonds, for example, inveighed against
the 'curse of Midas'.
Thus England asked for profits and received profits. Everything
turned to profit. The towns had their profitable dirt, their profitable
slums, their profitable smoke, their profitable disorder, their profitable
ignorance, their profitable despair. . .For the new town was not a
home where man could find beauty, happiness, leisure, learning,
religion, the influences that civilize outlook and habit, but a bare and
desolate place, without colour, air or laughter, where man, woman
and child worked, ate and slept. . . The new factories and the new
furnaces were like the Pyramids, telling of man's enslavement rather
than of his power, casting their long shadow over the society that took
such pride in them.2
There is room for a good deal more sociological research on
the social consequences of the industrial revolution, but many
of the political and moral assessments are highly subjective. The
argument has its parallel today in the modern controversy about
whether or not we should seek to bring backward village
communities, with their relatively simple scale of wants and
1
Engels, The Condition of the Working Class in England, trans, and ed. W. O. Henderson
and W. H. Chaloner, p. xxiii.
2
J. L. and Barbara Hammond, The Rise of Modern Industry (1925), p. 232.
pattern of activities, into the rough impersonal competition of

a market economy. It is not at all a meaningless problem from
the social point of view, though it is not easy to discuss it
objectively. But even if we refuse to be drawn into philosophical
or moral arguments about whether the workers actually in-
volved in the social and economic upheavals of the industrial
revolution grew happier or more civilized, there remains a
considerable area of legitimate controversy about whether their
material standard of living rose, stagnated or fell.
Here again, as with most of the problems of economic history
which are concerned with establishing the facts of growth or
decline, or the turning-points which mark their beginning or
end, the doubt arises because the historical record is incomplete;
in particular the quantitative data are too few or too scattered
or too selective to be conclusive. We are again obliged to
reconstruct a picture in which various crucial pieces of the
jigsaw are missing and to guess at what it means.
Consider, for example, the evidence for a rising standard of
living for the working population over the controversial period
1775-1850, within which we can assume that the English
industrial revolution largely took place. I have already discussed
the evidence on national income.1 If we juxtapose the contem-
porary estimates by Arthur Young for 1770 and various authors
in the first two decades of the nineteenth century they actually
suggest a decline in real incomes per head up to, at any rate,
the immediate aftermath of the Napoleonic Wars. But we are
justified in regarding these estimates sceptically. They are not
strong enough to take the weight of analysis. Attempts to trace
the course of total national output on the basis of incomplete
production series are more convincing. They suggest a rise
which may perhaps date from the 1740's in overall terms and
probably accelerated in per-head terms in the last quarter of
the eighteenth century under the influence of strongly expanding
overseas markets. An index of British industrial production
which has been compiled by the German scholar Hoffmann, and
which is also of necessity heavily dependent on the foreign-trade
series, suggests a similar movement.2 It shows a rate of growth
of total industrial output averaging under one per cent per
1
See above, pp. 5-10 and pp. 238-40.
2
W. Hoffmann, British Industry 1700-1950, trans. W. O. Henderson and W. H.
Chaloner (1958).
annum in the first three-quarters of the eighteenth century,
rising abruptly to over 3 per cent per annum in the 1780's and
early 1790's, falling back in the period 1793-1817 (probably as
a consequence of the war) and recovering to levels of over 3 per
cent again after 1817.
On the face of it then, we might say that since the evidence
points on the whole to an increase in national output per head
of population, beginning probably in the 1780's, muted by the
French and Napoleonic wars and resuming strongly at the end
of the second decade of the nineteenth century, it implies a rising
standard of living on the average. Actually, whether it does or
not depends on whether there were significant changes in the
distribution of the national income. It may be that all the value
of the increase in national output accrued to the upper income
groups—to the mill-owners and the iron-masters, for example,
rather than to the workers. Or it may be that the growth in
marketed output of corn or meat, say, due to the enclosures,
accrued to a small group of owner-farmers, while the cottagers
were evicted from their food plots and deprived of the common
pasture for cow and pig to become a distressed agricultural
proletariat. It is possible for national output to rise faster than
population and for the standard of living of the majority of the
people to fall because a few people are monopolizing the results
of the increase or because the new goods are not consumption
goods but capital goods.
One might also say, of course, as many holders of the
'optimistic' view have said, that the evidence for a sharp
decrease in mortality at the end of the eighteenth century points
to a rise in the standard of living. If people were becoming more
resistant to disease this could have been either because medical
skills were improving or because they were living better. The
medical historians, however, have discounted the evidence for
striking medical advances which could have had this result and
they fall back on the view that 'there was a general advance
in the standard of living in consequence of the economic
developments of the period'.1 Here again, there is a problem of
distribution to be taken into account, though in this case it is
a question of distribution through time. As Hobsbawm has
pointed out:
1
T. McKeown and R. G. Brown, 'Medical Evidence', p. 141.
It should be remembered that the decrease in mortality which is

probably primarily responsible for the sharp rise in population need
be due not to an increase in per capita consumption per year but to
a greater regularity of supply: that is, to the abolition of the periodic
shortages and famines which plagued pre-industrial economies and
decimated their populations. It is quite possible for the industrial
citizen to be worse fed in a normal year than his predecessor, so long
as he is more regularly fed.1
To this improvement in the temporal flow of incomes, invest-
ment in communications (better roads, canals, etc.) and regular
marketing of foodstuffs may have contributed more than
increased productivity in industry or increases in output per
acre.
However, the most striking feature of the mortality figures,
if we try to use them as an index of standards of living, is that
they show the decline in the death rate to have been arrested,
probably even reversed, in the period when the industrial
revolution was in full swing and began notably to affect the way
of life of a majority of the population. Death rates estimated
from burial figures reached an average of 35*8 per 1,000 in the
1730's and then fell steadily (with an interruption in the 1770's,
when there was a slight rise) to reach an average of 21 • 1 per
1,000 in the decade 1811-20. This was an impressive achieve-
ment. Then, however, they began to rise again to reach 234
in the decade 1831—40 and remained more or less constant at
over 22 per 1,000 (these are the official figures based on
registrations) in the 1840's, 1850's, and 1860's.2
The main reason for the rise in the national death rate in the
early nineteenth century was the influx of people into the towns
which had a high, and in some cases a rising, death rate. The
average death rate of the five largest towns outside London
(Birmingham, Bristol, Leeds, Liverpool and Manchester) rose
from 20- 7 in 1831 to 30*8 in 1841. For Liverpool parish the death
rate for the decade 1841-50 averaged 392 per 1,000 and in
Manchester it was 33-1. The fact is that the towns had been
outgrowing the existing technology of urban living. 'Over half
the deaths were caused by infectious diseases alone. . .Infant
1
E. Hobsbawm, 'The British Standard of Living 1790 1850', Economic History Review
(August 1957), p. 46.
2
John Brownlee, 'History of the Birth Rates and Death Rates in England and Wales',
Public Health (July 1916), p. 232.
diseases, product of dirt, ignorance, bad feeding and over-

crowding swept one in two of all the children born in towns out
of life before the age of five.'1 As the towns expanded over the
countryside and the population living in their centres multiplied,
the existing sanitation systems became so inadequate as to be
a growing menace to health. ' Street sewers were immense brick
caverns, flat bottomed and flat sided, washed only by a feeble
trickle of water', and cleared by excavation of the streets every
5—10 years.2 In some cases town sewage was allowed to flow into
the rivers from which the water companies were taking their
water supply. It took a series of cholera epidemics and some
alarming sanitary inquiries to persuade central and local
authorities to take positive action to clean filth from the streets
and courts, to adopt piped sanitation, and to make the private
water-companies chlorinate their water supplies. Meanwhile it
is fair to say that in most urban areas the human environment
was deteriorating perceptibly through the first half of the
nineteenth century and that it probably did not begin to
improve generally until the 1870's and 1880's.
To probe more directly the question whether the standard
of living of the working classes rose or fell in the course of the
industrial revolution we need to look at the data on wages.
What can we deduce from the way the real incomes of the
workers moved over the period of early industrialization? Here
the problem of interpreting the incomplete record is twofold—
whose wages should we consider and how are we to allow for
changes in the value of money?
First of all then, whose wages? For the data do not permit
us to compile a national wage bill which might give a measure
of overall average earnings from employment. All that is
available is a somewhat heterogeneous mass of wage quotations
for particular industries, occupations and regions which econ-
omists and economic historians may or may not have been able
to combine into meaningful aggregates. In general, of course,
the wages of workers in industry were higher than those in
agriculture, so that as the proportion in industrial employment
rose, the average money-wage probably grew. In the expanding
industries wages sometimes rose spectacularly; and, conversely,
' Royston Lambert, Sir John Simon, 1816-1904, and English Social Administration (1963),
2
P- 59-
R. A. Lewis, Edwin Chadwick and the Public Health Movement, 1832-1854 (1952), p. 48.
for craftsmen made redundant by mechanization they some-

times fell equally spectacularly. Take cotton, for example. Man-
chester cotton weavers were earning ys. to 10s. a week when
Arthur Young toured the north of England in 1769—before the
spinning-jenny provided them with enough yarn to keep their
looms going constantly. By 1792, made scarce by the enormous
quantities of yarn which the spinning-machines made available,
some weavers were earning 15^. to 20s. a week. But the supply
of weavers proved highly elastic and the labour market was soon
flooded with them. The trend to 'long hours and short wages'
had set in before the end of the 1790's; by 1815/19 average piece
rates for muslin weaving at Bolton, for example, were only about
a third of the 1795/9 level.1
Clearly the wage data for specific occupations or industries
may shed little or no light on the movement of wages over wide
areas of the economy. And as far as the eighteenth-century wage
data are concerned there is the additional problem that there
was no really integrated national market for labour until the
very end of the century. In effect, the outstanding characteristic
of eighteenth-century wage history was the existence of wide
regional variations in both levels and trends. In Lancashire, for
example, the money wages of builders' labourers almost doubled
between the 1750's and early 1790's. In London they seem to
have risen by less than 5 per cent; and in Oxfordshire the
increase was of the order of 15 per cent. Actually there was a
marked narrowing of the regional wage differentials before the
end of the eighteenth century, and by the late 1780's Lancashire
building labourers whose earnings had been two-thirds of the
London average in the 1750's were earning about gs. a week
compared with about 8s. 6d. in London and about gs. 6d. in
Oxfordshire.2
Of course the typical wage-earner in the late eighteenth
century was not the labourer in industry but the labourer in
agriculture. Bowley's figures of agricultural earnings suggest
that the average agricultural wage increased by something like
25 per cent between the late 1760's and 1795.3 The rise was most
marked in the Yorkshire Ridings, Lancashire, Northumberland
1
D. Bythell, The Handloom Weavers, p. 99.
2
Gilboy, Wages in Eighteenth Century England.
3
A. L. Bowley, 'Statistics of Wages in the U.K. during the Last Hundred Years: Part
I, Agricultural Wages', Journal of the Royal Statistical Society (December 1898).
and Staffordshire where the increase exceeded 50 per cent; but
over a very large part of eastern, middle and southern England
in the second half of the eighteenth century, agricultural wages
seem to have been in a state of relative stagnation similar to that
which characterized the London building-trades for this period.
When war with France broke out in the early 1790's, however,
the economy rapidly moved into a state of relatively full
employment and money wages in agriculture soared. Before the
end of the Napoleonic Wars a ' national' index of money wages,
calculated by combining Wood's index of average money wages
in towns with Bowley's index of money wages in agriculture,
showed an increase of about 75 per cent.
On the other hand if money wages rose steeply over this war
period 1792-1815, prices also rose fast. For this was a period
of galloping wartime inflation. Which brings us to our second
major problem of interpretation, the problem of allowing for
changes in the value of money. In order to get some measure
of the change in the standard of living we must form some view
of the movement of real wages; that is, to adjust money wages
so as to eliminate the effect of the upward movement in prices.
What I have said about the regional variations in the price
of eighteenth-century labour applies also to the prices of
commodities at this period—sometimes to an even greater
extent. For eighteenth-century England in which it took 10-12
days to travel from London to Edinburgh (that was in the
1750's), when the price of coal could vary from 15J. a chaldron
to over £ 3 a chaldron according to distance from the pits (this
was true even in the 1790's), and when the wages of a building
craftsman could vary from 2s. to 3^. a day according to the
region in which he operated, there is no satisfactory way of
constructing a general price index which could reflect changes
in the value of money for the economy as a whole. Each region
had its own price history and its own set of price relationships.
Even if we knew enough about the prices of each region to
construct a true national average it is doubtful what meaning
we could attribute to the result.
On the other hand it is certain that there were important
changes in the value of money during the latter part of the
eighteenth century and these changes must have had their effect
on prices. By the 1790's (probably by the 1760's) the majority
of prices had developed an upward trend. Until after the
Napoleonic Wars, however—possibly until the beginning of

the railway age—the movements of individual prices are so
divergent and so variable that the attempt to measure the
changes in the form of a general price index is a dubious
procedure. Moreover in a period of violent inflation—such as
that which developed in the last decade of the eighteenth
century when the cumulative effects of a rapidly rising popu-
lation, a succession of poor harvests and an expensive war drove
up the price of many foodstuffs—price indices based on weights
relevant to a less disturbed period do not adequately reflect
changes in the value of money. This is because they do not take
account of the fact that consumers look for substitutes for goods
whose prices have soared. They substitute goods which are less
vulnerable to harvest and war crises and their standard of living
does not fall to the extent that it would have done if they had
obstinately persisted in their old patterns of consumption.
So far I have been considering the conceptual difficulties of
constructing price indices that might enable one to allow for
changes in the purchasing power of money and so to convert
money wages to 'real' wages. But it goes without saying that
there are formidable data problems too. Most of the prices that
are regularly available for the period of the industrial revolution
relate to commodities which tended to be particularly vulner-
able to trade dislocations and harvest crises. In particular they
seldom cover the prices of manufactured goods (many of which
were reduced by the falling costs associated with industrializa-
tion) or of rent, which seems to have remained fairly steady. And
they are rich in the prices of foodstuffs and imported goods,
which tended to rise sharply when harvest failure or war made
them temporarily scarce. To some extent this bias is inevitable,
for it was the vulnerable prices which contemporaries chose to
collect and publish regularly and which are accordingly still on
record. But it means, of course, that indices based on these
selective quotations tend to exagerate the movements in the
general price leyel and become difficult to use as indications of
changes in the value of money during periods of inflation.1
The result is that when we try to take out from the wage data
the effects of the price rises due to harvest crises and war
1
See M. Flinn, 'Trends in Real Wages, 1750-1850', Economic History Review (1974),
and G. N. von Tunzelmann, 'Trends in Real Wages, 1750-1850, Revisited', Economic
History Review (1979), for a critical examination of the wage and price estimates
currently available.
shortages we completely wipe out any improvement in money
wages and it then looks as though average real wages were
declining over the period 1782 to 1815. Perhaps indeed they
were. When we also bear in mind the burden of war—the
British people paid heavy subsidies to their continental allies,
one in ten of the labour force was absorbed in the unproductive
employment of the armed forces and the growth of industries
producing for peacetime markets slackened perceptibly—it is
not difficult to believe that consumption standards were actually
falling. On the other hand when one takes into account the fact
that total war involved full employment of adult males, while
the spread of the factory system and the expansion of agricultural
acreages widened the employment opportunities for women and
children, it seems likely that the decline in the standard of living
of the typical working-class family—if decline there was—was
less drastic than the wage—price data might lead one to believe.
After the war, however, inflation turned to deflation and the
picture changes. Average money-wages declined and so did
prices. Within ten years (i.e. between 1816 and 1824, again
using the Bowley-Wood indices of agricultural and urban
earnings combined into a national average) money wages had
fallen by more than 10 per cent: by the 1840's the fall was 15
per cent. Prices, however, fell faster and at first glance we might
deduce that the purchasing power of the worker's wage rose.
For the longer period, up to about mid nineteenth century, this
certainly seems to be the most plausible interpretation of the
data. But for the distressed years of the immediate post-war
aftermath when the demobilized soldiers and seamen flooded
the labour market and the industries which had thrived in war
were facing a slump in demand, it is likely that higher real wages
earned by those who were lucky enough to be in regular
employment were insufficient to compensate for the loss of
earnings experienced by the unemployed or the under-
employed. In the tense years between Waterloo in 1815 and the
massacre of Peterloo in 1819 it has been said that England was
nearer to social revolution than at any other time in her
history.1 It seems probable that the real earnings of the average
working-class family were lower in these years than they had
been in the 1780's.
Thereafter the evidence for a rise in the average real wage
1
Briggs, Age of Improvement, p. 208.
becomes more convincing. It does not become absolutely
conclusive because we do not know the incidence of unemploy-
ment. In years, in regions or in sectors of the economy where
there was trade depression the evidence of acute poverty is
overwhelming. But there are three strong presumptions in
favour of a rising standard of living, on the whole, dating from
the 1820's: (1) that as industrialization gathered momentum in
the 1820's employment became more rather than less regular
than it had been in pre-war years; (2) that the goods that tended
to be omitted from the price indices, being largely manufactured
goods, were more likely to be falling in price than the goods
(largely raw materials) that were included—and hence of
course that the price indices understate the post-war price fall;
and (3) that the falling weight of taxation would, in a period
when most taxes were indirect and hence regressive, give
perceptible relief to the working classes.
Actually the conviction of the ' optimists' grows stronger for
years towards the end of the controversial period than for
periods towards the beginning. Professor Ashton for example is
most confident about the period after 1820. 'Let me confess,
therefore, at the start', he says, 'that I am of those who believe
that all in all, conditions of labour were becoming better, at least
after 1820, and that the spread of the factory played a not
inconsiderable part in the improvement. M Most observers agree
that the 1790's, with war, harvest failures and a rapidly
increasing population, was a tragic period for English labour.
Clapham, another of the optimists, calls 1795, the year when
the Speenhamland system was introduced to augment men's
wages out of the rates, 'the blackest year', and goes on to
conclude that,
whereas on the average the potential standard of comfort of an

English. . . rural labouring family in 1824 was probably a trifle better
than it had been in 1794, assuming equal regularity of work, there
were important areas in which it was definitely worse, others in which
it was probably worse, and many in which the change either way was
imperceptible. In the bad areas the rates were drawn upon for the
deficit.2
T. S. Ashton, 'The Standard of Life of Workers in England 1790-1830', Journal of

Economic History, Supplement I X (1949), p. 19. My italics.
Not even the most convinced 'optimists' have claimed that

working-class standards of living improved perceptibly during
the French wars or their immediate aftermath, though full
employment financed by income-tax may well have involved
some transfer of incomes from rich to poor. On the other hand
even the pessimists will allow that perceptible improvements in
working-class standards of living set in the 1840's.
In effect then we can narrow down the area of fiercest
controversy to the 1820's and 1830's. Here the data on wage-rates
and prices suggest a rising real wage, though not a very great
improvement. Between 1820 and 1840, for example, the Bowley-
Wood wage data suggest a fall of 10 per cent in money wages:
and the Gayer—Rostow—Schwartz price index suggests a fall of
about 12 per cent in prices. Professor Phelps Brown's index of
builders' wage rates, expressed in terms of the basket of
consumers' goods they might buy, suggests an improvement of
about 5 per cent over the same period. Now if we assume, as
the pessimists do, that 'the period 1811—1842 saw abnormal
problems and abnormal unemployment', 1 then the irregularity
of work could easily have outweighed these rather feeble
improvements in real incomes suggested by the wage/price
data. On the other hand if we assume, as the optimists do, that
the price indices understate the price fall (and hence the rise in
purchasing power of wages) because they omit the commodities
whose prices were influenced most strongly by the cost reduc-
tions of the industrial revolution, then we would argue that the
wage/price data are only a pale reflection of the true rise in the
standard of living. Without a great deal more research in the
areas of doubt—the incidence of unemployment for example
and the rise in the value of money—it is impossible to resolve
this problem, though on the whole the evidence for an im-
provement in standards seems stronger than the evidence for
a fall at this period.
Nor indeed can we say much about standards of consumption
more directly. Figures of imports of tea, sugar and tobacco for
example show very little rise (in some cases there are declines)
over the controversial period, and the current pessimists' case
rests a good deal on this negative evidence. Unfortunately these
imported commodities were not consumed in large quantities
1
Hobsbawm, 'The British Standard of Living 1790-1850', op. cit. p. 56.
by the average family and were subject to import duties which

made important differences to the rate of consumption. For
sugar there is evidence of a stagnant, even a falling consumption:
from 29^- lb. per head in 1811 to 15 lb. per head in 1840. For
tea there is evidence of a rise from about 1 lb. per head in 1811
(when, however, the duty paid was 4.J. per head) to about iy
lb. in 1841 (when the duty had fallen to under 3^. per head).
Consumption of tobacco, on the other hand, went down from
19 oz. per head in 1811 to about 14^ in 1841, but the duty
had gone up and no one knows how much tobacco was
smuggled in. These consumption figures are inconclusive in
their implications therefore, and we have no reliable estimates
of the consumption of more important items of working-class
expenditure, of bread for example, of milk or meat or butter or
eggs. True there are figures of beasts slaughtered at Smithfield
market but these are for numbers only, they make no allowance
for changes in average weight and they are incomplete even as
an index of London consumption, for we have no information
on the trade in other London meat-markets.
To sum up, then, what conclusions can we draw from all this?
The first is that there is no firm evidence for an overall
improvement in working-class standards of living between
about 1780 and about 1820. Indeed, if we take into account the
harvest failures, growing population, the privations of a major
war and the distress of the post-war economic dislocation, we
may reasonably conclude that on balance average standards of
living tended to fall rather than to rise.
For the period from about 1820 to about 1840 it is difficult
to be as definite. Certainly there is no evidence for a substantial
rise in real incomes and what rise we can deduce from the
statistics is not strong enough to compensate for the wide
margins of error in the data. On the other hand the evidence
for a fall in standards of living rests either on presumptions that
we cannot empirically check with the information now accessible
to us—like the incidence of unemployment, for example—or on
data on actual consumption per head of certain not very
important commodities whose consumption could as well be
attributed to changes in tastes or the weight of duties as to a
fall in real incomes. Perhaps on balance the optimists can make
out a more convincing case for an improvement in the standard
of living than the pessimists can for a fall. But either case is based
largely on circumstantial evidence and there is one thing that

we can take as reasonably certain—and that is that whichever
way it went, the net change was relatively slight.
Finally, beginning in the 1840's we find much stronger
evidence of an improvement in the average real incomes of the
working class, evidence that has been strong enough to convince
even some of the remaining pessimists. It does not rest however
on a perceptible increase in real wage rates. Habakkuk, for
example, observes that 'The inconclusive nature of the current
debate about living standards in this period is perhaps a
warrant for supposing that a substantial and general and
demonstrable rise in the real wages of industrial workers did not
occur until the 1850's and 1860's: it was not until about 1870
that real wages in agriculture began to rise and a steady rise
was apparent only in the 1880's." The argument for an
improvement in the average standard of living in the middle
of the century rests largely on a change in the composition of
the labour force. To quote Hobsbawm, the most recent of the
advocates of the pessimistic interpretation of the industrial
revolution:
Little as we know about the period before the middle forties, most
students would agree that the real sense of improvement among the
labouring classes thereafter was due less to a rise in wage-rates, which
often remained surprisingly stable for years, or to an improvement
in social conditions, but to the upgrading of labourers from very poorly
to less poorly paid jobs, and above all to a decline in unemployment
or to a greater regularity of employment.2
This shift in the distribution of the labour force from the
traditional highly seasonal occupations characteristic of a pre-
industrial economy to the modern sector with its mechanical
aids to labour, its disciplined working habits and its continuous
intensive use of capital equipment in day and night shifts is the
true spirit and essence of an industrial revolution. Agricultural
labourers, for example, normally earn less per week than factory
workers of equivalent skill; hand-loom weavers earn less than
power-loom weavers; canal bargemen less than locomotive
drivers. Thus a shift in the composition of the labour force—a
fall in the proportion of workers engaged in the low earning
1
H. J. Habakkuk, American and British Technology in the igth Century (1964), p. 139.
2
Hobsbawm, 'The British Standard of Living 1790-1850', op. cit. p. 52.
categories and a corresponding rise in the proportion of those
in the high earning categories—would raise the average level
of earnings per worker even if wage-rates in each occupation
remained unchanged. This is the process that seems to have
gathered momentum in the 1840's and to have brought with
it perceptible improvements in material standards of life for the
working classes. It may indeed have begun earlier, but it is not
until the 1840's that we can be reasonably certain of its positive
effects.
So much for the wage data. What about the national-income
estimates? These suggest that between 1801 and 1851 national
product per head at constant prices almost doubled. As between
the pre-war period (say 1791) and 1851 the improvement was
probably somewhat less, for 1801 was already a year of heavy
inflation. In the controversial period between 1821 and 1841,
however, there was an improvement, it seems, of over a third.
Whether this meant a corresponding increase in the average real
incomes of the working classes, however, would have depended
on the way the increase in the national product was distributed.
If the increase in incomes was entirely absorbed by the
property-owning classes in the form of profits and rent, and if
the increased output of goods and services took the form either
of capital goods or of goods and services that were outside the
normal budget of the wage-earners, then it is fair to presume
that the employed population gained nothing from the process
of early industrialization.
The evidence available certainly indicates that there was a
shift in the distribution of incomes in favour of profits and rent
and a change in the composition of output in favour of capital
goods, exports and goods and services for upper-class consump-
tion. But it is manifest that this is not the whole story. The new
factories were not producing entirely for the export or the luxury
trade or for producers, and the fact that prices of manufactured
consumer-goods fell substantially meant that the working classes
gained as consumers where they did not gain as wage-earners.
So that while on balance the evidence is strongly in favour of
the view that working-class standards of living improved by less
than the increase in national income per head would suggest
over the first half of the nineteenth century; and while there is
no doubt that certain sectors of the labouring poor suffered a
serious deterioration in their earning-power because they were
made redundant by technical progress, nevertheless it would be
difficult to credit an overall decline in real incomes per wage-
earning family in a period when aggregate real incomes for the
nation as a whole were growing appreciably faster than
population. In effect, the sustained growth of national product
to which industrialization gave rise tended to exert an upward
pressure on working-class standards of living in three main
ways, none of which implied a rise in the price of labour; (i)
by creating more regular employment opportunities for all
members of the family—this meant high earnings per year and
per family even without a rise in wages per man-hour worked;
(2) by creating more opportunities for labour specialization and
hence for the higher earnings that semi-skilled or skilled labour
can command: here again the average earnings can rise without
an increase in the wage rate because the composition of the
labour force changes in favour of the higher earning group; and
(3) the upward pressure on the workers' standard of living also
operated through the reductions in the prices of consumer goods
and the widening of the range of commodities which came
within the budget of the working classes. Finally of course, to
the extent that it raised real purchasing power for the masses,
industrialization expanded the market for manufactured goods
and so justified further increases in investment and output and
labour productivity.
CHAPTER l6
THE ACHIEVEMENT
By 1851, the year of the great Crystal Palace Exhibition, Britain

had clearly passed the point of no return in the process of
industrialization. This much was obvious to contemporaries
and has been accepted since by economic historians, though the
latter interpret it in different ways. According to Clapham,' the
course was set towards the "industry state" but the voyage was
not half over'. 1 According to the Rostow 'stages of growth'
model this was approximately the date at which Britain reached
'maturity', and had, by definition,
mastered and extended over virtually the whole range of its resources
all that the then modern science and technology had to offer an
economy with the resources and the population-resource balance of
mid-nineteenth century Britain. . . Less then seventy years from the
launching of the canal and cotton textile boom of the 1780's when the
industrial revolution may be said to have begun, Britain had
wholeheartedly transformed itself into an industrial nation—its
commitment confirmed by the Repeal of the Corn Laws.2
It is generally agreed, then, that Britain had been through
an industrial revolution by the middle of the nineteenth
century, though the revolution had by no means worked itself
out. What did this imply? What were the significant changes
that had taken place in the economy since the middle of the
nineteenth century? How far had it got on the route to today's
modern industrial economy? How, essentially, did it differ from
the pre-industrial economy that existed roughly a century
before on the threshold of the industrial revolution?
There are three main ways in which an economy which has
experienced an industrial revolution differs from its pre-
industrial counterpart. It differs (1) in industrial and social
1
2
Rostow, Stages of Economic Growth, pp. 6a 1.
272
THE ACHIEVEMENT 273
structure, (2) in productivity and in the standards of living
associated with higher productivity, and (3) in its rates of
economic growth.
I. INDUSTRIAL AND SOCIAL STRUCTURE
To begin with, then, let us consider the occupational structure
of the economy. What, in the first place, did its people do?
By 1850 Britain was certainly industrialized in that more of
its people were engaged in manufacturing industry than in
agriculture. Nearly 3^ millions of its labour force were manu-
facturers, compared with rather more than 2 million who were
agriculturalists. Moreover the agricultural industry was
distinguished at this stage by the fact that its landless labourers
constituted a relatively large proportion of its labour force. It
had moved a very long way, that is to say, from the peasant
economy. In 1851 more than three-quarters of the numbers
engaged in the agricultural industry of England and Wales were
paid employees. This was probably a larger proportion than
ever before or since. After the great exodus from agriculture in
the course of the following half-century the proportion of paid
employees fell below 60 per cent.
It should be remembered, however, first that the term
'manufacturer' or 'manufacturing industry' covers a wide
variety of activities, from the craftsman cobbler to the factory
worker; and second that the factory worker was not yet the
representative manufacturer. The kind of domestic industry in
which manufacturing activity was an off-season employment for
agriculturalists was of negligible importance by the middle of
the nineteenth century. But small-scale manufacturing at the
traditional family level of operations was far from dead. There
were more than a quarter of a million shoemakers recorded at
the 1851 census of occupations, and about half a million tailors,
dressmakers and milliners. There were more blacksmiths than
workers in the iron foundries and furnaces. More people were
working either in their own homes as self-employed craftsmen
or outworkers, or in small workshops, than in large-scale factory
industry. More people, actually more than one out of every
seven members of the labour force, were engaged in domestic
or personal service than in the textile factories. Industrialization
or no industrialization, the army of domestic servants, the host
of housemaids which served the Victorian middle-class home,
T H E
was still growing faster than the labour force, until towards the
end of the nineteenth century it reached its peak and accounted
for between 15 and 16 per cent of the occupied population of
Great Britain.
The other major occupational group in 1850 was the hetero-
geneous group engaged in commercial occupations—the shop-
keepers and their clerks, the dealers, the pedlars, the seamen and
the insurance agents. There were more than a million workers
in the trade and commerce group of industries and in addition
about half a million in each of the following: building, public
and professional services, transport and mining and quarrying.
Of these, only the railway workers were in an industry which
was characteristically 'modern', in that it had been revolution-
ized by the technological developments of the past century.
Even so, * more men were employed about horses on the roads
than in all the work of the railway system'.1 Seamen were still
literally sailors, who travelled for the most part in wooden
sailing-ships. Recruitment to the civil service was still dependent
on patronage. 'Sometimes the patronage was exercised by a
minister, sometimes by the local M.P., sometimes by the
departmental authorities. Often no doubt the patronage was
administered disinterestedly: but the fact remained that those
who entered the Civil Service under this system owed something
to somebody's influence.'2 Even in the coal-mines, although
there was mechanical lifting and pumping-gear, the men who
worked on the seams still used their muscles and a pick to get
the raw material on which (more than any other) British
industry depended.
What changes had taken place in the pattern of occupations
since the beginning of the industrial revolution? It is difficult
to make an exact comparison because we have no general census
of occupations for any date preceding 1841, and indeed not even
a population count preceding the 1801 census. We can be
reasonably certain that the population primarily engaged in
agriculture was a good deal higher in, say 1770, when probably
well over half of the labour force was so engaged, compared with
1
Clapham, Economic History, vol. n, p. 25.
2
Sir E. Bridges in The Civil Service in Britain and France, ed. W. A. Robson (1956),
p. 27. Written examinations for junior posts were introduced in 1855 but these were
merely elementary entrance tests. The first competitive examination was held in 1859
(for the Indian Civil Service) and in 1872 recruitment to the First Division began
to be based on a competitive examination of university degree standard.
THE ACHIEVEMENT 275
about a fifth in 1850. Probably less than a quarter of the
occupied population was primarily engaged in manufacturing
in 1770, and of these relatively few were employed outside their
own homes.
But probably the most significant difference in the labour
force of 1850 as compared with the mid eighteenth century was
that it was a more specialized labour force. In pre-industrial
times the vast majority of those engaged in manufacturing were
part-time workers in an industry whose principal economic
activity was agricultural or commercial. Even as late as the
1830's and 1840's it was difficult for those endeavouring to take
censuses of occupations to distinguish between the craftsman-
tradesman and the manufacturer. In 1831, for example, when
a census of occupations of adult males was taken as part of the
population census, those engaged in 'retail trade and handi-
crafts' were grouped together in a special category which
included (besides building and road transport and some cate-
gories of wholesale trade) a number of occupations which were
classified with manufacturing in later censuses. Probably the
deciding factor which determined whether an individual should
be enumerated with the retail trade and handicraft group of
occupations rather than with the manufacturing group was
(besides his skill) the fact that the former was a self-employed
person dealing with a purchaser of final products, rather than
a factory employee or an outworker. By 1850 the self-employed
artisan was becoming less predominant and the distinction
between manufacturer and shopkeeper was less fuzzy at the
edges. But retail trade was still generally a skilled occupation.
In effect, the distribution industry was one of the last major
strongholds of the traditional pre-industrial economy and
continued so until well into the nineteenth century. Of course
it had to adapt in some ways to the new shape of the
industrialized economy. In the mid eighteenth century many
of the things people consumed were made within the family or
bought at markets direct from producers in the same area. Goods
bought from more distant areas were usually sold at periodic
fairs which then constituted the most important wholesale and
retail outlet. As the towns expanded, however, and as road,
river, canal and later railway communications between them
improved, there was a decline in family or local self-sufficiency
and a corresponding increase in the importance of fixed shop
retailing. At the same time specialization in trade tended to
widen the gap between producer and consumer and to multiply
the number of wholesale and other kinds of intermediaries.
But these changes and developments in the distributive structure and
techniques between the middle 18th and middle 19th centuries would
appear to be mainly ones of degree, of modification and of shift of
emphasis rather than of transformation and reorganization. The basic
structure and character of the distributive trades, the emphasis on skill
and experience in retailing, the higgling as to price and the important
role played by open markets had not changed fundamentally.1
Thus even by the mid nineteenth century many people still
made the bulk of their everyday purchases in markets,
market-halls or fairs or from pedlars and travelling salesmen:
and even the urban upper classes still bought largely from
craftsmen-producers direct. The shop had begun to supplant
the pedlar or the itinerant tradesman of the fairs before the end
of the eighteenth century, but the fixed retail shops with window
display and a wide range of goods which are today's charac-
teristic retail outlets were still confined to the larger towns.
Most retailers played an important role in the preparation and
processing of the goods they sold and standards of quality were
therefore individual to each retailer. Working-class consumers
with a limited choice of shop, still more those who got part of
their wages in kind and were thus forced to buy in ' truck shops',
had to put up with adulteration of their purchases. Neither price
nor quality tended to be uniform as between different retailers.
In the better-class shops, for example, it was considered bad
taste to price-mark the wares—as it is indeed today in some
luxury establishments. Except where his choice of shop was
limited, however, the mid-nineteenth-century customer could
expect to influence the price he paid by bargaining with the
shopkeeper. 'There was an enormous growth of shops between
the 1820's and the 1850's, and much of this growth was
dominated by the small general shop which tended to be
operated by men and women of a similar social background to
the urban poor.' 2
What had happened however by 1850, as compared with say
1750, was that the range of goods regularly available to the
1
James B. Jefferys, Retail Trading in Britain 1850-1950 (1954), p. 5.
2
David Alexander, Retailing in England during the Industrial Revolution (1970), p. 234.
THE ACHIEVEMENT 277
average purchaser had widened and that the chain of inter-

mediaries between producer and consumer had lengthened. To
a large extent this was a consequence of the improved system
to communications. 'The trade in fresh dairy produce, for
example, had formerly been strictly localized, with little room
for intermediaries. The steamboat now brought fresh Irish
butter regularly to Liverpool and fresh West country butter to
London.'1 London's milk supplies were also affected by quicker
transport facilities. Cows were still being milked on the doorsteps
of suburban houses in the 1830's but country dairies 20-25 miles
out were already sending milk to London dealers in closed
containers in spring carts which sped rapidly over the improved
radius of roads stretching out from the metropolis. The railways
eventually revolutionized the market for milk though not as
rapidly as had been expected, and until the railway companies
learned to handle milk in such a way as to keep it cool (i.e. until
the 1870's) the rail-borne milk went mainly to the poor.
Vegetables were more easily transported and an elaborate
organization grew up at Covent Garden to deal with a trade
which as a consequence of the new coastal steamers of the 1820's
and 1830's had begun to reach into the farming areas of eastern
Scotland. On the other hand, the line of stations which had
grown up to serve the drovers on their long trek from the
grazing areas to the main towns lost their function when
livestock began to travel by railway truck, and when the speedy
transport of deadstock became possible on a large scale.
The fact is that, although a substantial proportion of the
inhabitants of mid-Victorian England were pursuing traditional
occupations with traditional techniques and methods of organi-
zation, there were few of them whose way of life had not been
changed radically by the industrial revolution and its associated
developments—by the great growth of population and its
redistribution from country to town and from south to north,
by the vastly improved transport system which widened the
domestic market for many commodities which had hitherto
been sold only at the local level, and by the expansion of
overseas trade which widened the range of goods on the British
market and created an unprecedented degree of dependence on
the world market. The process of change created problems of
its own.
1
The demographic changes, for example, raised a variety of
social problems. The great growth of population meant that
people crowded into urban areas whose amenities were designed
for sparser settlements. In 1770 the population of England and
Wales had begun to grow but was probably not much more than
7 millions. By 1851 it was near 18 million. In the mid eighteenth
century the proportion of the population living in concentrations
of even as little as 5,000 or more was probably not more than
16 per cent: by 1841 the proportion was in the region of 60 per
cent; and between 1841 and 1851 a further 1,800,000 people
(more than the total town population of the 1760's or 1770's)
were squeezed into the large towns.
More significant indeed than the absolute numbers living in
urban areas in the mid nineteenth century was the rate at which
these numbers were being added to by natural increase or
migration. It was this that created many of the social problems,
widened the gulf between rich and poor, made human labour
dirt-cheap, and created a squalid environment for so many
people. Composed as they were so largely of uprooted people,
the towns became a breeding ground for vice and crime. Out
of about 35- million people living in London and the main
English and Welsh towns in 1851, only about a third had been
born where they were then living. These early Victorian towns,
impersonal, unwholesome and harshly competitive, were grow-
ing faster than the ability of the municipalities to cope with
the sheer physical and social problems of urbanization. In every
spare corner of the towns another house was squeezed. With
largely unpaved streets and open sewers the living conditions
of the poorer, most overcrowded sections of the main townships
were appalling: epidemics of cholera or typhoid were uncom-
fortably frequent. Nor were they confined to the poor. Albert
the Prince Consort died of typhoid fever in 1861. But poverty
was the crime which mid-Victorian society visited with its most
savage penalties. Chadwick, the crusader for public health,
reported in the 1840's that the people living in the wynds of
Edinburgh and Glasgow or in the cellars of Liverpool, Man-
chester or Leeds lived in conditions worse than in the prisons.
If standards of health were put under pressure by an
expanding, increasingly concentrated, population so too were
standards of education. In the pre-industrial economy of the
early eighteenth century the poor got their education mainly
THE ACHIEVEMENT 279
through an increasing number of charity schools. The Society

for the Promotion of Christian Knowledge, for example, had
been founded in 1699 to organize charity schools 'for those
whom nature or family had determined to the plough, the oar
and other handicrafts' and within 35 years had set up or taken
under its wing 1,500 schools designed as 'little garrisons against
Popery'—thus goading Catholics and other non-Conformists to
set up rival establishments. But the driving force behind the
Charity School Movement had lost its momentum by the
second half of the eighteenth century. Two factors brought the
nation's educational system under increasing strain in the later
eighteenth century—one was the bulge in the population of
school age associated with the rising birth rate and falling child
mortality rate; the other was the rising demand for child labour.
The only area of free education which expanded in the late
eighteenth century was the Sunday School movement which
had the advantage of not encroaching on the pupil's working
week. It may have had some effect on the gradual improvement
in the proportion of women able to sign the marriage register
but it is unlikely to have been effective in raising substantially
the educational standards of the labouring poor.
There were of course the factory schools. In some of the early
factory villages the more enlightened employers (e.g. Richard
Arkwright) provided basic instruction in the three Rs for their
child employees, euphemistically called 'apprentices'; and
Peel's Health and Morals of Apprentices Act (1802) provided
that for the first four years apprentices were to be instructed by
a 'discreet and proper person'. But the Act was ineffective and
it was not until the 1833 Factory Act established a factory
inspectorate that schooling for child workers became at all
common. Even then the provision made was often minimal
especially in the early stages. Leonard Horner, one of the first
of the factory inspectors for example, recorded a case where the
factory 'school' was conducted by the fireman 'at intervals
between his feeding and stirring the fire of the engine boiler'.
More generally, it would appear that although national
educational standards may have slightly improved, due perhaps
to the increasing economic opportunities open to literate indi-
viduals, in some regions and occupations there was a marked
deterioration during the late eighteenth and early nineteenth
centuries. The evidence on illiteracy (measured by the crude
index of ability to sign the marriage register) suggests that a

majority of English males were literate by 1750 and of females
by the 1840's. By 1840 probably less than a third of English
males were unable to sign the marriage register.! For Lancashire
however there is evidence that literacy levels were actually
declining from the late 1790's to the early 1830's: and that, even
when an improvement set in in the late 1830's, there was no
corresponding increase in the job opportunities for those with
higher educational qualifications. The fact is that the factory
workforce often required less rather than more education than
the domestic outworker: it has been estimated, for example, that
powerloom weavers possessed less than a third of the literacy
level of the male weavers they replaced.2
An industrial revolution entails profound social as well as
economic changes, and the first industrial revolution found
society unprepared for the problems that emerged during the
upheaval. The Victorians of the mid nineteenth century were
acutely conscious of living in an age of transition. They were
always talking about it as such. Mill described the distinguishing
feature of modern life as the fact ' that human beings are no
longer born to their place in life. . .but are free to employ their
faculties and such favourable chances as offer, to achieve the
lot which may appear to them most desirable'. 3 Even those who
criticized the horrors of industrialism took an optimistic view
of the transition. They were immensely impressed by the sheer
magnitude of their achievement—bigger populations, longer
lines of railway, more tons of coal, more blast-furnaces, more
exports, etc. It was an industrial achievement which compared
favourably with that of any other nation in the contemporary
world and it is perhaps not surprising that they overrated the
significance of their material progress. Some of them saw the
railways as an instrument of moral and intellectual progress,
and associated industrial progress with the end of war. The
Prince Consort saw in the Great Exhibition concrete evidence
of'a period of most wonderful transition, which tends rapidly
1
R. S. Schofield,' Dimensions of Illiteracy, 1750-1850', Explorations in Economic History
(1973)-
2
Michael Sanderson,' Literacy and Social Mobility in the Industrial Revolution', Past
and Present (1972), p. 90.
3
J. S. Mill, The Subjection of Women (1869), p. 31.
THE ACHIEVEMENT 281
to accomplish that great end to which indeed all history

points—the realization of the unity of mankind'. 1
No doubt the Victorians were inclined to let their imagination
run away with them on this score, but the material achievements
which stimulated these moral flights of fancy were real enough.
Moreover, as far as the industrial revolution had gone by 1850,
they were achievements which were evidently the work of
practical men of business rather than men of education or
theoretical scholarship. The great inventors adopted an empi-
rical approach to the technological problems which interested
them and reached their solutions by experiment rather than
theory. Businessmen put them into practice in a hardheaded
way with profits as their sole criterion. It is not surprising that
anti-intellectualism became so marked a characteristic of
Victorian thinking. According to Huxley
practical men still believed that the idol whom they worship—rule of
thumb—has been the source of the past prosperity and will suffice for
the future welfare of the arts and manufacturers. They were of the
opinion that science is speculative rubbish: that theory and practice
have nothing to do with one another: and that the scientific habit of
mind is an impediment rather than an aid in the conduct of ordinary
affairs.2
Before the new technologies spread to other countries on a scale
sufficient to create foreign competition, there seemed nothing
wrong with this homespun philosophy. Judging by the success
with which British captains of industry took the lion's share of
world markets and cut their costs and raised their profits, they
knew how to conduct the nation's business. But when foreigners
began not only to imitate, but to develop the new techniques,
and when the course of technical change began to depend more
on progress in pure science—with the growth of industries like
the chemical industry and electrical engineering and the changes
in the iron and steel industry—the English entrepreneur began
to lag behind his continental competitors.
The top people, the men who took the crucial decisions, had
perhaps changed least of all under the impact of the Industrial
Revolution. According to Kitson Clark
1
Quoted W. E. Houghton, The Victorian Frame of Mind 1830-jo (1957), p. 43.
2
T. H. Huxley, Science and Culture and other Essays (1881), pp. 3-4.
the eighteenth century lingered at the top of society as obstinately and

as self-confidently as it did anywhere in the social pattern of Victorian
England. A wanderer from the 1750's would have found much to
wonder at and not a little to fear in the England of the 1850's, the
machines, the factories and their masters, the busy crowds, the
newspapers... all these things he might well find strange and disturb-
ing. But when he reached those who might be considered to be at
the head of society he might feel himself to be reasonably at home.
Many of them would be the grandchildren of men he had known, nor
would many of their thoughts and habits be altogether strange to
him.1
The middle classes were represented and considered in the
reformed Parliament but they did not control the policy
decisions. Bagehot writing in 1859 noted that 'the series of
Cabinet Ministers presents a nearly unbroken rank of persons
who are themselves large landowners or are connected closely
by birth or intermarriage with large landowners'.2 In the 1847
House of Commons there were still more than eighty members
who owed their seat to patronage. Even where democracy
seemed to prevail it took some curious forms. 'In a proprietary
borough like Malton, with a scot-and-lot franchise, many of the
poorer tenements occupied by labourers avowedly existed only
because votes were attached to them, and their votes were cast
not out of tenurial attachment to Earl Fitzwilliam but because
he footed the bill for bribing them. ' 3 Until the Ballot Act made
voting secret in 1872, landlords and employers could confidently
rely on the votes of men who depended on them for their
livelihood and much later than this, of course, the traditions of
a deferential society ensured that the local aristocracy exerted
a powerful influence in local elections. The fact that bribery was
possible meant that the effective political power never became
completely reserved to a closed caste. But there was nothing
new about this. Namier in discussing the eighteenth-century
unreformed Parliament remarked on the corruption of the
popular boroughs and interpreted it as ' a mark of English
freedom and independence, for no one bribes where he can
bully'. 4
It remains true, however, that in 1850 national economic
1
Kitson Clark, The Making of Victorian England, p. 206.
2
W. Bagehot, Essays on Parliamentary Reform (1883), p. 209.
3
F. M. L. Thompson, English Landed Society in the Nineteenth Century (1963), p. 205.
4
Lewis Namier, England in the Age of the American Revolution (1930), p. 4.
THE ACHIEVEMENT 283
policy decisions were still taken largely by people who, if they

were not themselves members of the nobility and gentry owed
their political power to the hereditary owners of the large
estates. These were not numerous. An inquiry into the holding
of land in England in 1871 showed that about half the land was
owned by 7,400 people. At this stage, in the golden age of
English agriculture, it is safe to assumed that these were the
richest men in the kingdom. Even those who made their fortunes
in industry and commerce normally consolidated their economic
and social position in the community by buying estates 'so that
as the century went forward, among the landed proprietors
could be found the Peels, the Arkwrights, the Barings, the
Strutts and other families who had made their fortunes before
they bought their land, many of whom became assimilated or
partly assimilated to the old social system'.1 What Namier said
of the mid eighteenth century could equally well be said of the
mid nineteenth century: 'wealth amassed in trade (or industry)
was laid out in landed estates and used to secure seats in the
House of Commons, for both helped to lift their holders into a
higher social sphere'.2 The fact moreover that investments in
land were not dependent solely on the fortunes of agriculture,
but owed a good deal of their return to the process of
industrialization—through the royalties on coal mines, for
example, or to rising land values due to railway construction
or urbanization—meant that it was to the interest of many of
the landed gentry to promote the process of industralization, to
hasten the industrial revolution on to completion. It was this
more than the growing influence of the loquacious middle
classes that set the course of the new industry state by shaping
economic policy at the national level. On the other hand, to the
extent that the ultimate ambition of British manufacturers was
to become landed proprietors, the most able entrepreneurs were
likely to retire before they had reached the fullest potential of
their industrial empires. James Nasmyth, for example, retired
when he was only 48. Sir John Guest retained his works 'but
acquired estates and a London house and diverted funds from
reinvestment to maintaining a position in society'.3
At the micro-economic level, however, it was the middle
1
Kitson Clark, The Making of Victorian England, p. 215.
2
Namier, England in the Age of the American Revolution, p. 10.
3
Habakkuk, American and British Technology in the igth Century, p. 178.
classes who took most of the economic decisions. It was their

enterprises that expanded the national product; it was their
improving standards of living that created much of the demand
for domestic manufactures; it was their savings that financed
the railways and much of the growing volume of overseas
investment; it was their anti-intellectualism, their puritanical
moral code which shaped the attitudes of mind which we tend
to regard as characteristic of Victorianism. In view then of the
acknowledged importance of this group in the community it is
worth while trying to form a precise view of who they were and
how large a section of the community they constituted around
1850.
In an estimate based on the returns of the 1851 census Dr
Erickson has calculated that the number of adult males who fell
within this category was rather less than if million, which
amounted to about 18 per cent of the occupied labour force.1
About half of them were engaged in commercial occupations
of various kinds—they were the merchants, the bankers, the
dealers, the shopkeepers and the army of underpaid clerks and
shop assistants who held down the white-collar jobs in
nineteenth-century England. About a quarter of them were
farmers; and the remaining quarter were members of the
professional, administrative and employing classes in commerce
or industry. It was this last group, the professional administrative
and employing classes outside agriculture, who took the major
economic decisions at the micro-economic level. It was this
group from which most of the innovators and the risk-takers
were drawn. It numbered not many more than 300,000 people.
The middle class was literate for the most part. Most of the
top 300,000 were educated in local schools, though by 1850 the
railway system was making it easier for them to send their sons
to the public schools. An inquiry into the social origins of the
steel manufacturers showed that in 1865 only 10 per cent of the
leading steel manufacturers had been to public schools.2 In 1850
the proportion would have been negligible. A century later one
out of three of the top managers had been to public school. Few
of the leading businessmen in the mid nineteenth century
continued their sons' education to what might be called a
secondary-school level. What it amounted to was that the
1
C. Erickson, British Industrialists, Steel and Hoisery i8jo-igjo (1959), p. 234.
2
C. Erickson, British Industrialists, p. 34.
THE ACHIEVEMENT 285
managers of British industry in the nineteenth century had

generally had their education on the job. In the steel and
engineering industries a seven-year term of apprenticeship,
beginning at the age of thirteen or fourteen, was common. In
the textile trades apprenticeship for future managers consisted
generally of a commercial training. This was where the sons of
businessmen began their education for managerial positions.
British industry was becoming inbred, highly specialized, by the
middle of the nineteenth century, in striking contrast to the
situation a century before when one entrepreneur might actively
engage in several different types of manufacture, in agriculture
and in commerce at one and the same time. In spite of the legend
perpetuated and to some extent created by Samuel Smiles
with his best-selling volume of biographies entitled Self-Help
(published in 1859), t n e chances of a man rising from the ranks
to managerial level, the chances even of a man rising to wealth
on the basis of his technical skill, were severely limited. The
successful British manufacturer was distinguished more by his
commercial experience than by his technical skill. This was
partly because successful innovation was a practical rather than
a scientific art in the first industrial revolution, and partly
because it was the profits earned in successful trading operations
that gave a man the kind of staying-power that was necessary
to enable him to ride out the cyclical depressions in demand that
characterized the industrial economy.
2. STANDARDS OF LIVING AND PRODUCTIVITY
Over the century that ended in the 1850's product per head is
estimated to have multiplied nearly 2y times in Britain, and this
brought with it more than a doubling of the national standard
of living.1 Not all industries nor all members of the community
shared in this improvement. In industries like transport, textiles
and iron manufacture, output per worker increased beyond all
previous experience, though wages per worker rose quite
modestly, and prices, particularly the prices of exports, fell
steeply. In some of the service industries that expanded their
employment in the large towns, productivity probably fell as the
population trying to earn a living in them grew faster than their
sales. Thousands of people are estimated to have been subsisting
1
Based on estimates of national product per head at constant prices made by Deane
and Cole, British Economic Growth.
on the sale of foodstuffs in the streets of London, for example,

and a few days of rain brought many of them near to starvation.
Many others found a precarious living by searching the rivers
and the sewers and the gutters for rubbish that might have a
market value if salvaged, for cigar ends that could be made up
again for resale—these were the mudlarks, the scavengers, the
wool-gatherers and the gutter-snipes. The large towns with their
wide range of opportunities for gainful employment attracted
a larger population than they could maintain in full-time
employment and the unlucky ones clutched at the chance to sell
their services on any terms at all.
The large mass of labourers with nothing but their muscles
for income-earning assets were no doubt better off in the
up-phases of trade cycles than their fathers or grandfathers had
ever hoped to be; but many of them were a great deal worse
off than their ancestors when trade depression brought unem-
ployment and destitution in the harsh shadow of the new
poor-law; and the spectre of unemployment was a real threat
even to those who kept their jobs. Those who stayed in
employment (and most of the time they did in this expanding
economy) consumed more material things and a wider range
of goods than their forefathers had done, but the difference was
not at all spectacular. Professor Phelps Brown's calculations of
the real wages of building craftsmen, for example, indicate that
in the 1850's the builder's real wage was only 20 per cent higher
than his counterpart's in the 1750's.1 And in 1848 J. S. Mill
wrote gloomily in his Principles that ' Hitherto it is questionable
if all the mechanical inventions yet made have lightened the
day's toil of any human being'. 2 Perhaps this was an exag-
geration. ' I t was easier to mind a completely self-acting mule
than to push about the carriage of the old hand-mule. The
power-loom shed was noisy and its looms had been speeded up:
but work in it was certainly lighter, day for day, than the bowed,
endless, insanitary monotony of that lower-grade handloom
weaving of the thirties and forties.'3
On the other hand it is doubtful whether many pre-industrial
workers spent quite so many hours per day and per week, week
after week, on the job as was common in the mid nineteenth
1
Phelps Brown and Hopkins, 'Seven Centuries of Building Wages'.
2
Principles, book u, ch. v.
3
Clapham, op. cit. vol. n, p. 447.
THE ACHIEVEMENT 287
century. The Ten Hours Act of 1847 had made the first real
impact on hours of work in the textile factories, where the
normal working day lasted from 12 to 123- hours even in the
best-regulated factories in the 1820's and 1830's. But the 1847
Act was not fully effective because the limits of the legal day
exceeded 10 hours and it was thus easy to evade the Act, since
workers operated in relays. The 1850 Factory Act stopped up
the loopholes in the 1847 legislation by introducing a 60-hour
legal week for women in the textile trades; and it was the
beginning of the English week-end for it ordered a stoppage of
work on Saturdays at 2 p.m. But the textile trades, so long the
location of the worst abuses of the factory system, were by then
better regulated than most, for the shorter hours which were
enforced for women and children could not help but affect the
conditions of the men who worked in association with them. The
builders worked 52-64 hours a week according to season; a
London compositor worked 63 hours a week all the year round,
as did the engineer and the iron-founder. 'There were trades
with longer regular hours; outwork of all kinds in which
inclination or necessity determined the working day; continuous
processes with 12-hour shifts; and all sorts of emergency
arrangements' 1 History does not record the hours worked in the
sweated unregulated workshops, but there 70 hours a week and
more was common enough when trade was good, and workers
were cast off entirely when it was bad. In general, however, in
most of the mechanized or heavy industries a working day of
10 or ioy hours was usual; and 10 hours a day at the beck and
call of a machine, or at the controls of a locomotive, or at the
difficult and often dangerous tasks of gas-works, chemical shops,
engineering works or steel furnaces, must have involved more
strain on the individual operative than much longer hours at
the pre-industrial processes, the pace of which the worker could
adjust to his own mood or inclination. Where legislation to
restrict hours was effective, employers often responded by
speeding up machinery and thus intensifying the toil of the
machine-minders. There was a loss of leisure and a building up
of tension involved in this acceleration of the pace of economic
life. Perhaps it is not surprising that the suicide rate went up
as the nineteenth century wore on. A writer in the 1851
1
Ibid. p. 448.
Edinburgh Review observed that the struggle for existence was ' by
no means confined to the lower orders. Throughout the whole
community we are all called to labour too early and compelled
to labour too severely and too long. We live sadly too fast.'1
Even the city offices, to quote Clapham,' even so capitalistic an
institution as Lloyds', were open on Saturday afternoons.
It seems then that if the working classes earned more and
spent more in 1850 than the labouring poor of the pre-industrial
times, they paid for it in intensified toil. The industrial revolution
gave them a chance to earn more by working harder. It had
not yet given them anything for nothing by 1850. If we were
to set against the welfare represented by higher money incomes
and lower prices for manufactures (though not for food) the
disutility of longer, harder working hours, it is doubtful whether
the balance would be tipped in their favour. For many of them
life on these terms was only acceptable if heavily laced with
strong liquor; and drunkenness, together with the degradation
and cruelty to which it gives rise, was one of the characteristic
features of the English scene in the mid nineteenth century—as
it had been of course a hundred years or so before, in the gin
age. Strong drink caused endless trouble to the employers of
labour, as the railway builders frequently complained, and it
had an important influence on the outcome of parliamentary
elections. It drew a firm line between the classes of society,
between the respectable and the disreputable, between the two
nations of rich and poor, in a way that was not nearly so evident
in the eighteenth century.
Compared with what it had been a century before then, the
standard of living of the British people in 1850 was higher on
the average and a great deal more varied. It was also, for a larger
number of people (if a smaller proportion of the population)
more vulnerable and more squalid. For many more still, it was
achieved at the cost of more labouring effort. The workers in
a pre-industrial society have their hours of work dictated by the
seasons, by the weather, by the hours of daylight and darkness
and by the limited number of opportunities for gainful employ-
ment open to the weaker members of the community (the
women and children for example). Their leisure is not always
of their own choosing, though it is not therefore valueless. In
1
W. R. Grey, ' E n g l a n d as it is', Edinburgh Review (1851), p. 325.
THE ACHIEVEMENT 289
an industrial society work can go on throughout the year and

through the night, so long as the output can find a market, and
there are many gainful tasks for unskilled and relatively feeble
hands. But, given a rising, urbanizing population and an
ill-informed, unorganized workforce, the supply of unskilled,
casual labour at the disposal of the typical industrial entre-
preneur was normally in excess of his demand. So in times of
boom most workers could be forced either to work intolerably
long hours, or to cope with dangerously accelerated production
processes and machines. In times of slump, they were at high
risk of unemployment, protected from destitution only by an
inadequate and often savagely-administered system of poor
relief.
Compared with their contemporaries in other countries, the
British people enjoyed a richer and more varied standard of
living as a result of industrialization. Estimates of average
national income per head suggest that they were then the most
affluent people in the world. On the other hand, there were
many of them, living in overcrowded insanitary urban condi-
tions, whose real standard of life was much less desirable than
that currently enjoyed by their North American or Australian
contemporaries with somewhat lower money wages. In terms
of national product per head it was apparently not until the last
quarter of the nineteenth century that the level for the United
States taken as a whole overtook that of the United Kingdom,
though in New England and the Middle Atlantic States the
Americans had probably drawn ahead by the 1850's. Moreover,
American labour, because it was scarce, often found it easier to
establish a claim to better working conditions. 'Immigrants'
letters sometimes refer not so much to the effect of machinery
in maintaining higher wages as to its use to ease the burden of
the worker.' 1
3. RATES OF GROWTH
The third respect in which the industrialized economy differed

from the pre-industrial economy was in the extent to which it
was growing and changing. Population, national output and
incomes per head were all growing faster than they had done
in the pre-industrial era and they were growing continuously.
1
Habakkuk, American and British Technology in the Nineteenth Century, p. n o .
Nevertheless growth was not a uniform process, and by the
1850's there were already some areas in which retardation had
set in. Population grew at a decadal rate of between 11 and 14
per cent for most of the nineteenth century but it had reached
its peak rate in the second decade. For industrial production the
peak rate of growth was reached in the 1820's and 1830's. For
exports the peak rate came in the period 1848-56, when the
volume of British domestic exports more than doubled in less
than a decade.
The rate of growth of real national product was given by two
factors: the momentum achieved in the sectors that were
modernizing and the rate at which resources were shifted from
low-productivity low-growth sectors to high-productivity high-
growth sectors. So, for gross national product as a whole, the
peak rate of growth was not reached until the second half of the
nineteenth century when industrial output was already showing
a retarded rate of growth, but when the growing weight of the
industrial sector, which was associated with the great exodus of
labour from agriculture, altered the balance of the economy.
Until the 1850's the shift from agriculture to industry, from
country to town, had been a relative shift. The labour force in
agriculture was still expanding, the population in the rural areas
was still growing. It was as though the old pre-industrial
economy continued to exist more or less intact beside the
industrializing economy which drew its numbers and its strength
from the surplus generated by an expanding population. Then
in the second half of the nineteenth century the pre-industrial
sector began to disintegrate. The numbers engaged in agriculture
and those living in the rural areas began to dwindle in absolute
terms. Thenceforth the progress towards the complete industrial
state was rapid and unchecked and by the end of the century
the pre-industrial pockets left in the economy were rarities.
Before the middle of the nineteenth century, however, prob-
ably before the end of the first quarter, the process of
industrialization had gone far enough to give the British
economy a built-in tendency to continuous economic growth.
The volume of capital at the disposal of the labour force was
growing rather faster than the labour force itself and the
long-term trend was definitely set towards a continuous increase
in the productivity of the worker. But if growth was by then
continuous it was neither steady nor fast. Compared with
THE ACHIEVEMENT 291
countries which have industrialized since—compared even with
the countries like the United States and Germany which had
gone into their industrialization before the end of the nineteenth
century—the British rate of growth was a slow process. It is
doubtful, for example, whether the long-term rate of growth
ever went much above 3 per cent per annum, even in the second
half of the nineteenth century when capital and labour resources
were shifting rapidly from the low-income agricultural sector
towards higher-income sectors like industry or transport. Over
most of the nineteenth century the British economy seems to
have been growing at an annual rate of between 2 and 3 per
cent per annum. In the United States, by contrast, the rate of
growth of total output for the period 1839-1913 was between
4 and 5 per cent per annum.
In part, of course, the slowness of the British rate of growth
was an inevitable consequence of the fact that this was the first
industrial revolution. Trail-blazing is often slow and the
economies which followed in the path of the pioneer had the
advantage of having some of the uncertainties removed from
their path. The later a country began to industrialize the larger
was the body of technological knowledge that was open to it to
adopt, and the less was the cost in time, or in abortive
experiment, that it had to incur in order to reach the levels of
productivity achieved by its predecessors. On the other hand
there are advantages as well as disadvantages in being first in
the field, and the first country to industrialize must have found
it easier, in the virtual absence of all competition, to open up
new markets.
There are basically three main factors on which the rate of
growth of an economy depends: the rate of growth of (and
improvement in) the labour force, the rate of capital accumu-
lation and the rate of technological change. In all these respects
the British economy seems to have developed relatively slowly
by comparison with the later countries to industrialize. The
population increase reached its peak in the decades of 1811-31
when it was at the rate of about iy per cent per annum, but
for the rest of the nineteenth century the annual rate of change
was under i± per cent. In most other countries which have
industrialized since the first industrial revolution annual rates
of increase of over 2 per cent have been reached and sustained;
and in regions where, as in North and South America, there was
a strong immigration operating in conjunction with a high rate
of natural increase the labour force has often expanded at
long-term rates of over 2y per cent per annum.
Nor was the British economy distinguished by a high pro-
pensity to invest, so that its aggregate capital stock did not ex-
pand rapidly. It is probable that the nation's stock of capital grew
somewhat faster than its total income in the period 1780-1830
and distinctly faster in the railway age, particularly in the
period 1830-1860. But at no stage in this process of industria-
lization did capital formation grow to be a high proportion of
the national income, and it is doubtful whether net new
investment was running at an average rate which represented
more than 10 per cent of net national product by the 1850's.
Moreover, by the 1850's an increasing proportion of the new
investments made out of the British national income were going
abroad: and these foreign investments, though they created
incomes for British investors and helped to create markets for
British exports, did not add directly to the national wage bill
or to the physical stock of capital in British industries, to the
extent that investment at home would have done.
Technical progress also proceeded at a leisurely pace in the
British industrial revolution by comparison with later indus-
trializations. The transition from hand spinning-wheel to
powered spinning-machines and from charcoal-fired furnaces
to coal-fired furnaces took place quite rapidly after the crucial
inventions in the last quarter of the eighteenth century, and the
mainline railways were laid down within a couple of decades
after their economic justification had been established in the
early 1830's. Nevertheless these were not typical instances. In
many respects British industry was distinguished more by the
slowness with which it modernized its methods than by its
readiness to change. Cartwright introduced his power-loom in
the 1780's, but it took another 60 years before it effectively
replaced the hand-loom in the cotton industry and longer still
to come into general use in the other textile industries. As late
as 1850 the steam-horsepower in use in the textile factories was
only about 108,000: it had been nearly 75,000 in 1839. This
represented, at both dates, a total of between five and six
workers for every unit of steam-horsepower generated in the
British textile factories. It was not until the late 1850's and the
1860's that the textile factories began to turn over to steam-
horsepower on any scale, and even in 1871 there were still
THE ACHIEVEMENT 293
roughly two workers to every unit of steam-horsepower in the

textile factories. Moreover, outside the textile factories and the
mines, iron-works and railways, steam-power was still a rarity
in the mid nineteenth century, half a century after Watt's patent
had lapsed and left the way open for any British producer to
adopt and adapt the steam-engine.
On the other hand, American inventiveness had begun to be
apparent to contemporaries even before American manufac-
turers began to compete with British manufactures on world
markets. By the time of the Great Exhibition of 1851 'the
well-informed knew that an American was more likely than an
Englishman to get tiresome and expensive handicraft operations
done for him by machinery'. 1 The Americans, with their
shortage of labour and with the enterprising attitudes charac-
teristic of an immigrant community, were exceptionally recep-
tive to labour-saving improvements. 'A number of inventions
in the textile industry in the nineteenth century were made in
Britain but practically applied and developed principally in the
U.S.A.' 2
By 1859, less than a decade after the introduction of the
sewing machine, there were five times as many in operation in
the United States, as in Britain with its extensive clothing
industry. The Americans proved proved readier to mechanize
because they had stronger incentives to adopt labour-saving
methods and because they were relatively free from the ingrained
conservatism that stems from a long industrial tradition. The
Germans proved readier to develop new technologies because
Prussian educational policy had given them the corps of
research scientists required by the new industries emerging in
the second half of the nineteenth century—the chemical and
electrical industries for example. When in 1856 Perkin, a young
British chemist, discovered, literally by accident, a method of
making dyes (which Britain needed in great quantities for its
textile industry) out of coal (a natural resource which Britain
had in accessible abundance), it was the Germans who created
a new industry out of the discovery and by 1879 they were
producing four times the British output. 3
The corollary of a modest rate of technical progress is a slow
1
C l a p h a m , Economic History, vol. n, p . 12.
2
Habakkuk, American and British Technology in the Nineteenth Century, p. 120.
3
T h e story is told by D. S. L. Card well, The Organization of Science in England (1957),
p p . 79 and 105.
THE
rate of growth in the productivity of the economy. If total
national product grew between 2 and 3 per cent per annum over
most of the nineteenth century, product per head grew by only
about iy per cent in the first half of the century and by less than
2y per cent for most of the second half. A growth rate of iy per
cent per annum implies a doubling in productivity in a little
under half a century, which is not a revolutionary rate of
progress, and even at 25- per cent per annum it would take
almost a generation to double its level. The fact is that there
was still a large area of British economic life that had been
untouched by the industrial revolution. The number of indi-
viduals engaged in personal and domestic service, for example,
continued to grow in absolute terms until the First World War;
and the fact that one out of every six or seven members of the
labour force was so engaged reflected the relative abundance
of labour which was reducing entrepreneurial incentive either
to innovate or to add to the community's capital equipment.
Finally it is worth noticing another distinctive and significant
dimension of the growth record of the British economy over the
period of the industrial revolution: that is the extent to which
it was dependent on the international economy both for
material inputs and for final demand. Between 1750 and 1800
both real gross national product and the volume of domestic
exports roughly doubled, while the volume of retained imports
roughly trebled. Between 1800 and 1850 gross national product
and imports both increased some three and a half times in real
terms; while domestic exports increased by a factor of nearly
six and a half times in real terms, and somewhat less in money
terms because increasing productivity was permitting a fall in
the prices of British manufactured exports. The link with the
international economy was a major reason why the first indus-
trial revolution was able to develop spontaneously in a country
with a relatively small population and a relatively narrow basis
of natural resources. The increasing strength of that link may
also have contributed to the characteristically low propensity
to invest and to innovate which seems to have distinguished
British industrial entrepreneurs in the late nineteenth century
from their rivals in other industrializing countries. For heavy
dependence on an international market increases the uncer-
tainty of economic predictions and hence the risks of invest-
ment in new fixed capital equipment and technological change.
THE ACHIEVEMENT 295
In sum then, endowed as it was with abundant labour, a
limited and exhaustible heritage of land and other natural
resources, a modest propensity to save and invest and a
government which preferred to leave economic development to
the free play of private enterprise, the British economy came
through its industrial revolution with a relatively low growth-
potential by comparison with most of the countries which
industrialized later. Several decades of easy success encouraged
its entrepreneurs to believe they could avoid rapid changes. At
the time of the 1851 Exhibition British manufactures and British
machinery were technologically superior, except in a few special
cases, to those of any other country. But it was no more than
a matter of time before faster-growing rivals with a clear trail
to follow and stronger incentive to invest and innovate would
begin to outstrip her in their readiness to reduce costs and thus
to threaten her virtual monopoly in world markets. When these
rivals found governments which were ready actively to assist the
industrialization process—even if it was only to the extent of
using tariff policy in the interest of domestic producers—the end
of British industrial supremacy was definitely in sight.
GUIDE TO FURTHER READING
This bibliography does not provide an exhaustive list of publications

dealing with the first industrial revolution, but is intended to introduce
students to further reading on topics raised in this volume, and is
biased towards collections of articles and critical surveys of current
controversies. Most of the readings are listed in relation to particular
chapters, but there is a preliminary general section which contains
items relating to all or several chapters. The entries in the general
section are not repeated in the lists relating to particular chapters.
GENERAL WORKS
i. National studies and readings

Ashton, T. S. The Industrial Revolution, 1760-1830 (rev. ed. 1968).
The Eighteenth Century (1955).
Brown, M.' Towards an endogenous explanation of industrialization',
Social Research (1966).
Clapham, J. H. An Economic History of Modern Britain, vol. 1 (1939).
Deane, Phyllis, and Cole, W. A. British Economic Growth 1688-igjg
(1962).
Flinn, M. W. Origins of the Industrial Revolution (1966).
Hartwell, R. M. (ed.). The Causes of the Industrial Revolution in England
Hobsbawm, E. J. Industry and Empire: an Economic History of Britain since

1750 (1968).
Landes, D. The Unbound Prometheus: Technological Change and Industrial
Development in Western Europe from 1J50 (1969), p. 277.
Mantoux, P. The Industrial Revolution in the Eighteenth Century (12th
edition 1961), with introduction by T. S. Ashton.
Mathias, P. The First Industrial Nation (1969).
Perkin, H. J. The Origins of Modern English Society iy80-1880 (1969).
Pressnell, L. S. (ed.). Studies in the Industrial Revolution (i960).
Thompson, A. The Dynamics of the Industrial Revolution (1973).
2. Regional studies
Barker, T. C. and Harris, J. R. A Merseyside Town in the Industrial
Revolution: St Helens (1954).
296
GUIDE TO FURTHER READING 297
Chambers, J. D. Nottinghamshire in the Industrial Revolution (1932).
'The Vale of Trent 1760-1800', Economic History Review Supple-
ment, no. 3 (1957).
Court, W. H. B. The Rise of the Midland Industries 1600-1838 (1938).
Dodd, A. H. The Industrial Revolution in North Wales (1933).
Hamilton, H. The Industrial Revolution in Scotland (1932).
Economic History of Scotland in the Eighteenth Century (1963).
John, A. H. Industrial Development of South Wales 1750-1850 (1950).
Marshall, J. Furness in the Industrial Revolution (1958).
Rowe, J. Cornwall in the Age of the Industrial Revolution (1953).
3. Industry studies
(Other than those listed for chapters dealing with specific industries
such as cotton, iron, transport, agriculture)
Ashton, T. S. and Sykes, J. The Coal Industry of the Eighteenth Century
(1959)-
Coleman, D. C. The British Paper Industry I4g^-i86o (1958).
C r u m p , W. B. The Leeds Woollen Industry 1780-1820 (1931).
Clow, A. and N. L. The Chemical Revolution (1952).
Haber, L. F. The Chemical Industry during the Nineteenth Century (1958).
Hamilton, H. English Brass and Copper Industries to 1800 (1926).
Heaton, H. The Yorkshire Woollen and Worsted Industries from the Earliest
Times to the Industrial Revolution (1920).
Lipson, E. History of the Woollen and Worsted Industries (1921).
Mathias, P. The Brewing Industry in England 1700-1830 (1959).
CHAPTER I. THE STARTING-POINT

Alexander, R. M.' Economic Growth in England before the Industrial
Revolution', Journal of Economic History (1969).
Ashton, T. S. An Eighteenth Century Industrialist (1939).
Briggs, A. The Age of Improvement (1959).
Brown, E. H. Phelps, and Hopkins, Sheila V. 'Builders' Wage-rates,
Prices and Population', Economica (1959).
Clark, P. and Slack, P. (eds.). Crisis and Order in English Towns 1500—1700
Coleman, D. C. 'Industrial Growth and Industrial Revolutions',

Economica (1956).
Deane, Phyllis.' The Long Term Trends in World Economic Growth',
Malayan Economic Review (1961).
Habakkuk, H. J. 'The Historical Experience in the Basic Conditions
of Economic Progress', in Economic Progress, ed. L. Dupriez
(1955)-
Hicks, Sir J. A Theory of Economic History (1969).
John, A. H. 'Aspects of English Economic Growth in the First Half
of the Eighteenth Century', Economica, vol. xxvm (1961), p. 19.
298 GUIDE TO FURTHER READING
King, Gregory. Two Tracts, ed. George E. Barnett (Baltimore,
I936)-
Laslett, P. The World We Have Lost (1965).
Lewis, W. A. Theory of Economic Growth (1955).
Marshall, Dorothy. English People in the Eighteenth Century (1956).
Mathias, P. 'The Social Structure in the Eighteenth Century: a
Calculation by Joseph Massie', Economic History Review (1957).
Mendels, F. F. ' Proto-industrialization, The First Phase of the Indus-
trialization Process', Journal of Economic History (1972).
Nef, J. 'The Progress of Technology and the Growth of Large-scale
Industry in Great Britain 1540-1640', reprinted in Essays in
Economic History, ed. E. M. Carus-Wilson, vol. 1 (1954).
'The Industrial Revolution Reconsidered', Journal of Economic
History (1943).
Rostow, W. W. The Stages of Economic Growth (Rev. ed. 1969).
Smith, Adam. The Wealth of Nations (1776).
Supple, B. A. ' Economic History and Economic Underdevelop-
m e n t ' , Canadian Journal of Economics and Political Science ( 1 9 6 1 ) .
Young, Arthur, Travels in France, ed. Maxwell (1929).
Political Arithmetic (1774).
CHAPTER 2. THE DEMOGRAPHIC REVOLUTION

Chambers, J. D. 'Population Change in Nottingham, 1700-1800' in
Studies in the Industrial Revolution ed. L. Pressnell (1956).
Flinn, M. W. British Population Growth 1700-1850 (1970).
(ed.). Scottish Population History (1977).
Glass, D. V. and Eversley, D. E. C. (ed.). Population in History
(1965).
Habakkuk, H. J. Population Growth and Economic Development since 1750
(1970-
Helleiner, K. 'The Population of Europe from the Black Death to the
Eve of the Vital Revolution' in Cambridge Economic History of
Europe, iv (1967).
Hollingsworth, T. H. 'The Demography of the British Peerage',
supplement to Population Studies (1964).
Jones, E. L. and Mingay, G. E. (eds.). Land, Labour and Population in
the Industrial Revolution (1967).
McKeown, T. C. and Brown, R. G. 'Medical Evidence Related to
English Population Changes in the Eighteenth Century', Popu-
lation Studies (1955).
McKeown, T. C , Brown, R. G. and Record, R. G. 'An Interpretation
of the Modern Rise of Population in Europe', Population Studies
(1972).
Shrewsbury, J. F. D. A History of Bubonic Plague in the British Isles
Wrigley, E. A. 'Family Limitation in Pre-industrial England', Eco-
nomic History Review (1966).
Population and History (1969).
CHAPTER 3. THE AGRICULTURAL REVOLUTION

Chaloner, W. G. 'The Agricultural Activities of John Wilkinson,
Ironmaster', Agricultural History Review (1957).
Chambers, J. D. 'Enclosure and the Small Landowner', Economic
History Review, vol. v (1953).
Chambers, J . D. and Mingay, G. E. The Agricultural Revolution
1750-1880 (1966).
Collins, E. J. T. 'Harvest Technology and Labour Supply in Britain,
1790-1870', Economic History Review (1969).
Drummond, J. and Wilbraham, A. The Englishman's Food (1957).
Ernie, Lord. English Farming Past and Present (1961 ed. with intro-
ductions by G. E. Fussell and O. R. Macgregor).
W. G. Hoskins, The Midland Peasant (1957).
Hunt, H. G. ' Landownership and Enclosure 1750-1850', Economic
History Review, vol. xi (1959).
Jones, E. L. (ed.). Agriculture and Economic Growth in England 1650-1815
Kerridge, E. The Agricultural Revolution (1967).

Mingay, G. E. English Landed Society in the Eighteenth Century (1963).
Enclosure and the Small Farmer in the Age of the Industrial Revolution
(1967)-
O'Brien, P. K. 'Agriculture and the Industrial Revolution', Economic
Parker, R. A. C. 'Coke of Norfolk and the Agrarian Revolution',
Economic History Review, vol. vm (1955).
Payne, F. G. 'The British Plough: Some Stages in its Development',
Agricultural History Review (1957).
Salaman, R. N. History and Social Influence of the Potato (1949).
Slater, Gilbert. The English Peasantry and the Enclosure of the Common
Fields (1907).
Thirsk, J. English Peasant Farming (1957).
Trow-Smith, R. A History of British Livestock Husbandry 1700-igoo
(1959)-
CHAPTER 4. THE COMMERCIAL REVOLUTION
Ashton, T. S. Economic Fluctuations in England 1700-1800 (1959).
Berrill, K. E. 'International Trade and the Rate of Economic
Growth', Economic History Review, vol. xn (i960).
Clark, G. N. Guide to English Commercial Statistics 1606-1782 (1938).
Cole, W. A. 'Trends in Eighteenth Century Smuggling', Economic
History Review, vol. x (1958).
3OO GUIDE TO FURTHER READING
Davis, Ralph. 'English Foreign Trade, 1770—1774', Economic History

Review, vol. xv (1962).
Hecksher, E. Mercantilism (2nd ed. 1955).
Imlah, A. H. Economic Elements in the Pax Britannica (1958).
Jenks, L. H. The Migration of British Capital to 1875 (1927).
Letiche, J . M. Balance of Payments and Economic Growth (1959).
Minchinton, W. E. (ed.). The Growth of English Overseas Trade in the
Seventeenth and Eighteenth Centuries (1969).
Ramsay, G. D. English Overseas Trade during the Centuries of Emergence
(1957)-
Redford, A. Manchester Merchants and Foreign Trade (1934).
Schumpeter, E. B. English Overseas Trade Statistics i6g?-i8o8, edited
with an introduction by T. S. Ashton (i960).
CHAPTER 5. THE TRANSPORT REVOLUTION
Albert, W. The Turnpike Road System in England, 1663-1840 (1972).
Bagwell, P. S. The Transport Revolution from 1770 (1974).
Davis, R. 'Earnings of Capital in the English Shipping Industry
1670-1730', Journal of Economic History (1957).
Hadfield, Charles. British Canals (1959).
Jackman, W. T. The Development of Transportation in Modern England
(1916).
Simmons, J. The Railways of Britain. An Historical Introduction (1961).
Singer. C , Holmyard, E. J., Hall, A. R. and Williams, Trevor. History
of Technology, vol. iv (1946).
Swan, D. 'The Pace and Progress of Port Investment in England
1660—1830', Yorkshire Bulletin of Economic and Social Research
(i960).
Webb, S. and B. English Local Government: the Story of the King's Highway
Willan, T. S. The English Coasting Trade 1600-1750 (1938).
CHAPTER 6. THE COTTON INDUSTRY

Baines, Edward. History of the Cotton Manufacture in Great Britain (1835).
Blaug, M. 'Productivity of Capital in the Lancashire Cotton Industry
during the Nineteenth Century', Economic History Review, vol. xm
(i960.
Bythell, Duncan. The Handloom Weavers (1969).
Chapman, S. J. The Lancashire Cotton Industry (1904).
Chapman, S. D. The Cotton Industry in the Industrial Revolution (1972).
Collier, F. The Family Economy of the Workers in the Cotton Industry,
1784-1833 (1964).
Daniels, George W. The Early English Cotton Trade (1920).
Edwards, M. M. The British Cotton Trade, 1780-1815 (1967).
Ellison, Thomas. The Cotton Trade of Great Britain (1886).
Lee, C. H . A Cotton Enterprise, iygj-1840: A History of McConnel and

Kennedy•, Fine Cotton Spinners (1972).
Rodgers, H. B.' The Lancashire Cotton Industry in 1840', Transactions
of the Institute of British Geographers (1960).
Smelser, N. J . Social Change in the Industrial Revolution ijjo-1840 (1959).
Taylor, A. J. 'Concentration and Specialization in the Lancashire
Cotton Industry', Economic History Review (1949).
Wadsworth, Alfred P. and Mann, Julia de Lacy. The Cotton Trade and
Industrial Lancashire 1600-1780 (1931).
CHAPTER 7. THE IRON INDUSTRY
Ashton, T . S. Iron and Steel in the Industrial Revolution (1924).

Campbell, R. H. The Carron Company (1961).
Flinn, M. W. 'Abraham Darby and the Coke Smelting Process',
Economica (1959).
Men of Iron: the Crowleys in the Early Iron Industry (1962).
Hammersley, G. 'The Charcoal Industry and its Fuel', Economic
Hyde, C. K. Technological Change in the British Iron Industry 1700-1870
# (1977)-
Raistrick, A. A Dynasty of Iron Founders (1951).
Riden, P. 'The Output of the British Iron Industry before 1870',
Economic History Review (1977).
Roepke, H. G. 'Movements of the British Iron and Steel Industry,
1720-1951', Illinois Studies in the Social Sciences (1956).
Schubert, H . R. History of the British Iron and Steel Industry from c. 450
B.C. to A.D.1775 (1957).
Scrivenor, H . History of the Iron Trade (1854).
CHAPTER 8. THE SOURCES OF INNOVATION
Bernal, J. D. Science in History (1954).
Caird, J. English Agriculture (1851).
Chaloner, T. E. People and Industries (1963).
Coleman, D. C. 'Technology and Economic History 1500-1750',
Economic History Review, vol. xi (1959).
Derry, T. K. and T. I. Williams. A Short History of Technology
(i960).
Dickinson, H. W. and Jenkins, Rhys. James Watt and the Steam Engine
(1927)-
Habakkuk, H. J . American and British Technology in the Nineteenth Century
(1964).
Hall, A. R. The Scientific Revolution 1500-1800 (1954).
Hills, R. L. Power in the Industrial Revolution (1970).
Musson, A. E. (ed.). Science, Technology and Economic Growth in the
Industrial Revolution (1972).
and Robinson, E. Science and Technology in the Industrial Revolution
Pollard, S. The Genesis of Modern Management. A Study of the Industrial

Revolution in Great Britain (1965).
Singer, C , Holmyard, E. J., Hall, A. R. and Williams, Trevor. History
of Technology, vols. m and iv (1946).
Tarn, J. 'Fuel Saving in the Process Industries during the Industrial
Revolution: a Study in Technological Diffusion', Business History
(1973)-
Usher, A. P. A History of Mechanical Inventions (1929).
von Tunzelmann, G. N. Steampower and British Industrialization to i860
(1978).
Wilson, Charles, and Reader, William. Men and Machines (1958).
Wrigley, E. A. 'The Supply of Raw Materials in the Industrial
Revolution', Economic History Review, vol. xv (1962).
CHAPTER 9. THE ROLE OF LABOUR
Ashton, T. S. 'The Coal Miners of the 18th Century', Economic History,
vol. 1 (1928).
Blaug, M. 'The Myth of the Old Poor Law and the Making of the
New', Journal of Economic History (1963).
' The Poor Law Report Re-examined', Journal of Economic History
(1964).
Briggs, A. and Saville, J. (eds.). Essays in Labour History (1967).
Chambers, J. D. 'Enclosure and Labour Supply in the Industrial
Revolution', Economic History Review, vol. xi (1958).
Coats, A. W. 'Changing Attitudes to Labour in the Mid-Eighteenth
Century', Economic History Review, vol. xi (1958).
Cole, G. D. H. A Short History of the British Working Class Movement
17S9-1947 (1948).
Collier, F. 'Workers in a Lancashire Factory at the Beginning of the
Nineteenth Century', Manchester School of Social and Economic
Studies (1936).
Fitton, R. I. and Wadsworth, A. P. The Strutts and the Arkwrights
175S-1830 (1958).
Gilboy, Elizabeth. Wages in Eighteenth Century England (1934).
Jones, E. L.'The Agricultural Labour Market in England 1793-1872',
Economic History Review, vol. xvn (1964).
Pinchbeck, I. Women Workers in the Industrial Revolution 1750-1850
Pollard, S. 'Factory Discipline in the Industrial Revolution', Economic

History Review, vol. xvi (1963).
'Labour in Great Britain', Cambridge Economic History of Europe,
vol. VII, ed. P. Mathias and M. M. Postan (1978).
Redford, A. Labour Migration in England, 1800-50 (1926).
Rude, G. English Hunger and Industrial Disorders: A Study of Social Conflict
in the First Decade of George Ill's Reign (1973).
Thompson, Edward. The Making of the English Working Class (rev. ed.
1968).
Thompson, E. P. 'The Moral Economy of the English Crowd', Past
and Present (1971).
Webb, S. and B. History of Trade Unionism (1922).
CHAPTER 10. THE ROLE OF CAPITAL

Campbell, R. H. 'The Financing of the Carron Company', Business
History (1958).
Chapman, S. D. 'Fixed Capital Formation in the British Cotton
Industry, 1770-1815', Economic History Review (1970).
Crouzet, F. (ed.). Capital Formation in the Industrial Revolution (1972).
Deane, Phyllis. 'Capital Formation in Britain before the Railway
Age', Economic Development and Cultural Change (1961).
Dubois, A. B. The English Business Company after the Bubble Act (1938).
Evans, G. H. British Corporation Finance 1775-1850 (1936).
Feinstein, C. H. 'Capital Formation in Great Britain', Cambridge
Economic History of Europe, vol. vn, ed. P. Mathias and M. M.
Postan (1978).
Felix, D . ' Profit Inflation and Industrial Growth: the Historic Record
and Contemporary Analogies', Quarterly Journal of Economics
(1956)-
Hamilton, E. J. 'Prices and Progress', Journal of Economic History
(1952).
Hoselitz, B. F. ' Entrepreneurship and Capital Formation in France
and Britain since 1700', in National Bureau of Economic
Research, Capital Formation and Economic Growth (1955).
Hunt, B. C. The Development of the Business Corporation in England,
1800-1867 (1936).
Jenks, L. H. Migration of British Capital to 1875 ( I 9 2 7)-
Mathias, P. 'Capital, Credit and Enterprise in the Industrial Revo-
lution', Journal of European Economic History (1973).
Pollard, S.' Investment, Consumption and the Industrial Revolution',
'Capital Accounting in the Industrial Revolution', Yorkshire
Bulletin of Social and Economic Research (1963).
'The Factory Village in the Industrial Revolution', English
Historical Review, vol. LXXIX (1964).
Postan, M. 'The Accumulation of Capital', Economic History Review,
vol. vi (1935).
Shapiro, S. Capital and the Cotton Industry in the Industrial Revolution
(1968).
Ward, J . R. The Finance of Canal Building in Eighteenth Century England
(1974)-
CHAPTER II. THE ROLE OF THE BANKS
Clapham, J . H . The Bank of England, 2 vols. (1944).
Cramp, A. B. Opinion on the Bank Rate 1822-60 (1902).
Dickson, P. G. M. The Financial Revolution. A Study in the Development
of Public Credit, 1688-1756 (1967).
Eagly, R. V. and Smith, V. K. 'Domestic and International Integra-
tion of the London Money Market, 1731-1789', Journal of
Economic History (1976).
Feaveryear, A. E. The Pound Sterling (1931).
Fetter, F. W. Development of British Monetary Orthodoxy (1965).
Gregory, T. E. The Westminster Bank (1936).
Hawtrey, R. G. A Century of Bank Rate (1938).
Joslin, D. M. 'London Bankers in Wartime 1739-84', in Studies in the
Industrial Revolution, ed. L. S. Pressnell (1956).
Morgan, E. V. The Theory and Practice of Central Banking (1943).
Pressnell, L. S. Country Banking in the Industrial Revolution (1956).
Sayers, R. S. Lloyds Bank in the History of English Banking (1957).
CHAPTER 12. THE ADOPTION OF FREE TRADE
Barnes, D. G. The History of the Corn Laws (1934).
Brady, Alexander. William Huskisson and Liberal Reform (1928).
Briggs, Asa. The Age of Improvement (1959).
Brown, Lucy. The Board of Trade and the Free Trade Movement, 1830—42
(•958).
Clapham, J. H. 'The Last Years of the Navigation Acts', English
Historical Review, vol. x x v (1910).
Clark, G. Kitson. The Making of Victorian England (1962).
Cole, G. D. H. Chartist Portraits (1965 edition with an introduction by
Asa Briggs).
Fairlie, S. 'The Corn Laws and British Wheat Production, 1829—76',
Economic History Review (1969).
Fay, C. R. The Corn Laws and Social England (1932).
Imlah, A. H . Economic Elements in the Pax Britannica (1958).
McCord, N . The Anti Corn League 1838-1846 (1958).
Thompson, Edward. The Making of the English Working Class (1963).
Woodham-Smith, C. The Great Hunger (1962).
CHAPTER 13. THE ROLE OF GOVERNMENT
(See also references listed as relating to chapter 12 above)
Blaug, M. 'The Myth of the Old Poor Law and the Making of the
New', Journal of Economic History (1963).
' The Poor Law Report Re-examined', Journal of Economic History
(1964).
Brebner, J. Bartlett. 'Laissez-faire and State Intervention in Nine-
teenth Century Britain preprinted in Essays in Economic History, ed. E.
Carus-Wilson, vol. m (1962).
Cooney, E. W.' Public Opinion and Government Policy in Nineteenth-
century British Economic History: A Review and a Study of the
Building Industry', Yorkshire Bulletin of Economic and Social Research
Hart, J. 'Nineteenth-century Social Reform: A Tory Interpretation

of History', Past and Present (1965).
MacDonagh, O. 'The Nineteenth Century Revolution in Govern-
ment: a Reappraisal', Historical Journal (1958).
A Pattern of Government Growth 1800-60 (1961).
Marshall, Dorothy. ' T h e O l d Poor Law 1662-1795', reprinted in
Essays in Economic History, ed. E. M. Carus-Wilson, vol. 1 (1954).
Marshall, J . D. The Old Poor Law iygj-1834 (1968).
Parris, H. Government and the Railways in Nineteenth Century Britain (1965).
Prouty, R. The Transformation of the Board of Trade 1830-1855 ( T 957)-
Roberts, D. Victorian Origins of the British Welfare State (i960).
Rose, R. B. 'Eighteenth Century Price Riots and Public Policy in
England', International Review of Social History (1961).
Taylor, A. J . Laissez-faire and State Intervention in Nineteenth-century
Britain (1972).
Veverka, J. 'Growth of Government Expenditure in the United
Kingdom since 1790', Scottish Journal of Political Economy (1963).
CHAPTER 14. ECONOMIC GROWTH AND ECONOMIC CYCLES

Ashton, T . S. Economic Fluctuations in England (1959).
Beveridge, Sir William. 'Wheat Prices and Rainfall in Western
Europe', Journal of the Royal Statistical Society (1922).
'The Trade Cycle in Britain before 1850', Oxford Economic Papers
(1940).
Cairncross, A. K. and Weber, B. ' Fluctuations in Building in Great
Britain 1785-1849', Economic History Review (1956).
Gayer, A. D., Rostow, W. W. and Schwartz, A. J. The Growth and
Fluctuation of the British Economy iygo-i8jo, 2 vols. (1953).
Gould, J. D. 'Agricultural Fluctuations and the English Economy in
the Eighteenth Century', Journal of Economic History, vol. xxn.
Kondratieff, N. D. 'The Long Waves in Economic Life', Review of
Economic Statistics (1935).
Lewis, J . P. Building Cycles and Britain's Growth (1965).
Matthews, R. C. O. A Study in Trade-Cycle History (1954).
Rostow, W. W. British Economy of the Nineteenth Century (1948).
Schumpeter, J. Business Cycles, vol. 1 (1939).
Silberling, N. J. 'British Prices and Business Cycles 1779-1850', Review
of Economic Statistics (1923).
Smart, W. Economic Annals of the Nineteenth Century 1801-30, 2 vols.
(1910-17).
Thorp, W. L. and Mitchell, W. C. Business Annals (1926).
CHAPTER 15. STANDARDS OF LIVING
Briggs, A. The Age of Improvement (1959).
Brown, E. H. Phelps and Hopkins, S. V.' Seven Centuries of the Price
of Consumables, Compared with Builders' Wage Rates',
Economica, vol. xxm (1956).
Engels, F. The Condition of the Working Class in England (1844),
translated and edited by W. O. Henderson and W. H. Chaloner
(1958).
Flinn, M. 'Trends in Real Wages 1750-1850', Economic History Review
(1974)-
George, M. D. London Life in the Eighteenth Century (1930).
Hammond, J. L. and B. The Rise of Modern Industry (1925).
The Village Labourer, 1760-1832 (1911).
The Town Labourer, 1760-1832 (1920).
The Skilled Labourer, 1760-1832 (1919).
Hartwell, R. M. The Industrial Revolution and Economic Growth (1971).
Hobsbawm, E. J. 'The Standard of Living in the Industrial Revolu-
tion', Economic History Review (1963).
Institute of Economic Affairs, The Long Debate on Poverty (2nd ed.
1974)-
Lambert, Roys ton. Sir John Simon 1816-1904 and English Social Admin-
istration (1963).
Lewis, R. A. Edwin Chadwick and the Public Health Movement 1832-1854
(1952).
Pollard, S.' Investment, Consumption and the Industrial Revolution',
Taylor, A. J. 'Progress and Poverty in Britain 1780-1850: A Reap-
praisal,' History (i960).
(ed.). The Standard of Living in the Industrial Revolution (1972).
Thompson, E. The Making of the English Working Class (1963).
Ward, J. T. The Factory Movement 1830-1855 (1962).
Williams, J. E. 'The British Standard of Living 1750-1850', Economic
Wood, G. 'The Course of Average Wages between 1790 and i860',
Economic Journal (1899).
Woodruff, W. 'Capitalism and the Historian: a Contribution to the
Discussion on the Industrial Revolution in England', Journal of
Economic History, vol. xvi (1956).
CHAPTER l6. THE ACHIEVEMENT

Burn, W. L. The Age of Equipoise (1964).
Card well, D. S. L. The Organization of Science in England (1957).
Chambers, J. D. The Workshop of the World (1961).
Clark, G. Kitson. The Making of Victorian England (1962).
Erickson, Charlotte. British Industrialists; Steel and Hosiery 18^0-igjo
Ferguson, T. 'Public Health in the Nineteenth Century', Population

Studies (1964).
Habakkuk, H. J. American and British Technology in the Nineteenth Century
(1962).
Hough ton, W. E. The Victorian Frame of Mind 1830-1870 (1957).
Jefferys, James B. Retail Trading in Britain 1850-1950 (1954).
Porter, G. R. The Progress of the Nation (1847 ed.).
Sanderson, M. 'Literacy and Social Mobility in the Industrial
Revolution in England', Past and Present (1972).
Schofield, R. S. 'Dimensions of Illiteracy, 1750-1850', Explorations in
Entrepreneurial History (1973).
Stone, L. 'Literacy and Education in England, 1640-1900', Past and
Present (1969).
Thompson, F. M. L. English Landed Society in the Nineteenth Century
West, E. G. Education and the Industrial Revolution (1975).

Woolf, Michael. 'Victorian Study: an Interdisciplinary Essay', Vic-
torian Studies (1964).
SUBJECT INDEX
Aberdeenshire, 33 Birmingham, 15, 71, 75, 76, 81

Africa, 49, 55, 57, 58 birth rates, 20-8, 31, 33-5, 94, 255, 279
African Company, 57 Black, Dr, 179
Agincourt, 12 Black Death, 12
agriculture, development of, 13-14, 15, Blackfriars Bridge, 114
18, 37-52, 88, 123-4, 128-33, 147, Board of Agriculture, 48, 211
205-6, 208-9, 210-11, 214, 215-17, Board of Trade, 230, 231, 232, 235
243, 246, 262-3, 273 Bolton, 154, 262
Albion flour mill, 105, 127 Bonnie Prince Charlie, 245
America, 4, 17, 57-9, 66, 67, 88, 134-5, Borough Police Act (Manchester), 236
142, 150, 194, 251, 289, 291, 293 Boulton, Matthew, 90, 104, 179
American War of Independence, 31, 50, Bradford, 154
58, 68, 69, 78, 90, 122, 134, 191, 222 Brazil, 9
Amsterdam, 59, 176 bread, 42, 222, 225; see also Assize of Bread
Angevin kings, 54 breweries, 79, 127, 130, 138
Anglican schools, 235 bricks, 82, 126, 138
Anti-Corn Law League, 211-13 Bridgewater, Duke of, 78, 79, 80, 82
apprenticeship, 220, 222, 224, 225, 285 Brighton, 75
Arkwright, 90, i n , 136, 156, 179, 283 Brindley, James, 79, 125
Asia, 49, 84 Bristol, 15, 75, 84, 127, 130, 173, 260
Assize of Bread, 221-2, 225 Bubble Act, 124, 221, 222
Australia, 192, 289 Bubonic plague, 28-9
building, 15, 105, 110, 116, 126, 137
back-to-back housing, 236 Bullion Committee, 200
balance of payments, 63, 192, 199-200,
247 calicoes, Indian, 55, 66, 88, 94, 222, 223
Ballot Act, 282 canals, 78-83, 84-5, 114-15, 121, 126,
Bank Charter Act, 197-202, 226, 235 143, 167, 173, 176, 181-2
Bank of England, 17, 183, 184-5, 186-91, Canning, 230
193-4, I97~2O2, 226, 235, 245 Canton, 235
Bank of France, 199 capital
Bank Rate, 226 circulating, 170-1
'Banking school', 198-200 fixed, 156, 167, 170-1, 178
banknotes, 185, 186-95, 197, 199-201 role of, 81-6, 93, 140, 165-82, 292
banks, 17, 175, 178, 179-80, 183-202 sources of, 17, 51-2, 59-60, 70, 80-2,
Barton aqueduct, 79 173-82
beer, 130, 247; see also breweries -output ratio, 84-6, 93, 139, 165, 292-3
Benthamite utilitarianism, 225, 233 social overhead, 72-3, 83-4, 176
Bessemer, 113 capitalism, 96-8, 103, 105, 115, 130-1,
Bethnal Green, 146 140, 157-60, 254, 256-7
Bills of exchange, 188-9, *9l> !94> r99> carding machine, 89
200 Carlisle, 76
308
SUBJECT INDEX 3O9
Carron company, 109, n o , 179 Cornwall, 112
Cartwright, 91, 136, 292 Cort, Henry, 110-11, 112, 137-8
cash, 185, 189-91, 193-5, 199; see also cottagers, 7, 14, 15, 42, 45-6, 49, 132,
money i33~4» H 6 - ?
cement, 126 cotton industry, 14, 50, 65-7, 69, 87-102,
Census of population, 22-4, 34, 284; see 103, 121, 125, 134, 140, 169, 178,
also occupations, census of 252, 292
Chadwick, Edwin, 234, 278 Covent Garden, 277
charcoal, 104, 107-9, I25> 13^i J43> 2 9 2 Cowper, 113
Charitable Bank, 175 Crawshay, 110
charity schools, 279 Crimean War, 217
chartered companies, 17, 56-7, 183, 185, crises, financial, 244-5
221 Crompton, 90
Chartism, 162, 213-14 crop rotation, 39-40, 124
chemical industry, 281, 293 Crystal Palace Exhibition, see Great Exhi-
cheques, 185, 186, 200 bition of 1851
Cheshire, 154 craft guild, 160
child mortality, see mortality Cumberland, 169
chimney sweeps, 232, 233 'currency school', 198-9, 200-1, 226
China, 225 cycles in economic activity, 238-54
cholera, 261, 278 cylindrical tiles, 41
City of London Sewers Act of 1851, 236
civil service, 158-9, 230-1, 232-3, 236, Darby, Abraham, 104, 108, 179
274 death rates, 20-36, 260-1; see also
Cleveland, 169 mortality
coal, 79, 81, 85, 94, 102, 104, 106, 109-15, deflation, 265
117, 125-6, 127, 133, 136-7, 138, demobilization, 265
141, 143, 263, 283, 292, 293; see also demographic transition, 34
coke Derby, 222, 245
Coalbrookdale, 108 Devonshire, 28
Cobden, 213 distribution industry, 275-6
coffee, 64 docks, 83-4, 170, 181
coke, 104, 108-10, 113-15, 138, 143, domestic service, 15, 273 4
179 Doncaster, 91
collective bargaining, 160-3 drainage, land, 41, 47, 52, 215, 216-17
Colonial Ofice, 233 drink, strong, 9-10, 288; see also gin
Colyton, 28 Dublin, 127
Combination Laws, 161-2, 227
Committee on Import Duties, 205 East India Company, 56, 89, 225
communications, 17, 72-86, 125, 166, economic growth, 11-13, 18-19, 20, 122,
196, 275, 277 133; i35» l 6 4 , 238-43, 289^95
concrete, 126 Eden, Sir F., 175
Consols, 184 Eden Treaty, 203
constant tillage, 38 Edinburgh, 72, 263, 278
continental blockade, 194 Education, standards of, 1833 Returns,
contraception, 28 278-80, 284-5
copper, 139, 195 electrical engineering, 281, 293
corn emigration officers, 233, 235, 236
bounty, 132, 207 enclosures, 40, 42-6, 48, 123 4, 128,
export of, 9, 63, 206 133-4, 142, I46~7> 150, 209, 215
price of, 25-6, 43-4, 46, 47, 49, 207-8, entrepot trade, 55-6, 57-8, 59-61
209-10, 214, 216, 226 entrepreneurs
Corn Laws, 205-13, 217, 218, 227, 231, attitudes of, 46-51, 123-31
272 education of, 284-5, 293
3io SUBJECT INDEX
epidemics, 12, 21-2, 27, 28-9, 31, 232, Great Exhibition of 1851, 272, 280, 293,
261, 278 295
Europe, 22, 29,54-5,57-9, 73, 134-5, 186 Great Northern Railway, 172
Exchequer Bills, 184 Great Western Railway, 173-4
expectation of life, 35 Grimsby, 84
guano, 215
factories, 16, 18, 85, 89-91, 92-3, 115, Guest, Sir John, 283
120, 125, 130, 140, 146, 147, 155-6,
163, 169, 181, 230, 257, 265, 273, hand harvesting, 39
292-3 handloom weavers, 91-2, 93-4, 96-7,
Factory Acts, 145, 233, 279 100-1, 148, 154, 169, 171, 262, 269,
factory inspectors, 233, 279 286
factory schools, 279 Hanway, 232
famine, 21, 33, 44, 154, 211, 227, 241, 260 harbours, 77, 83-4
fertility Hargreaves, 89, 90, 92
land, 13, 39 harvests, 26, 29-30, 31-3, 41, 43, 49,
population, 26, 28 131-3, 135, 151, 154, 192, 200, 206,
fertilizers, 52, 168, 210, 215-16 207-8, 211, 213, 245, 246-7, 248,
feudal society, 158 264
Fishguard, 193 Health and Morals of Apprentices Act,
Fitzwilliam, Earl, 282 233> 279
flax, 95, 129, 179 health, standards of, 28-31, 260-1, 278;
flying shuttle, 88-9, 136 see also epidemics, infectious disease
food imports, 50, 206, 208; see also Corn Hearth Tax returns, 22
Laws Hereford, 172
riots, 207-8 Hereford-Gloucester canal, 80
Foreign Office, 235 Highways Committee of 1808, 76
France, 1 0 - n , 112, 150, 193, 203, 223, holdings, size of agricultural, 45-6
251; see also Bank of Holland, 10, 223
Free Trade, 203-18, 225, 227-8, 231 Homer, Leonard, 279
French Revolution, n , 50, 161, 207, 224 horse-drawn hoe, 38
French wars, 31, 47, 52, 59, 60, 83, 122, hosiery industry, 129, 179
124, 134, 176, 192, 222, 224, 229-30, hospitals, 30
240, 254, 259, 263-5, 267; see also hours of work, 97, 100, 101, 146, 149, 227,
Napoleonic wars 233, 286-9
Hudson's Bay Company, 56
Game Laws, 42 Hull, 77, 84
gas, 99, 101, 105, 114, 116, 146, 176,287 Huntsman, Benjamin, 108
General Enclosure Act, 44 Huskisson, William, 204-5, 227, 230
George III, 47 Hutton, William, 222
Germany, 251, 291, 293
gin, 9, 25, 49, 132, 288 illiteracy, see literacy, education, schools
Gladstone, 226, 229 imperial preference, 204
Glasgow, 71, 154, 278 income tax, 8, 51-2, 203, 205, 224,
Glorious Revolution, 8, 19, 184 267
gold, 183-4, 185, 186, 187, 188, 190-1, incorporation, 124, 180; see also joint-stock
companies
Gold Standard, 186, 187-8, 194, 197-8 India, 9, 17, 29, 55, 57, 89, 225
government industrial revolution
capital formation, 84 changes involved in, 1-2, 35-6, 47,
role of, 219-37; see also laissez-faire 139-41, 147-8, 159-60, 181-2,
Grand National Consolidated Trades 255-8, 280, 290-2
Union, 163 timing, 2-4, 61, 67, 87, 103, 119-22,
Grand Junction Railway, 173 272, 292-3
SUBJECT INDEX
3"
infant mortality, see mortality Lancashire, 17, 80, 89, 94, 95, 99, 127,
infectious disease, 27, 31, 260-1; see also 154, 169, 179, 197, 262, 280
epidemics land drainage, see drainage, land
inflation, 32, 46, 176-8, 194, 264-5 land stewards, 48, 128, 216
inland navigations, 78-80 land-tax, 51-2, 128
innovation, 38-42, 45, 46-9, 55, 66-7, 70, Lawes, 216
82-3, 86, 93-5, 98-9, 101-2, 104, leather industry, 127, 225, 247
106-7, 108-14, 119-41, 143-4, *77> Ledbury, 80
179, 181, 189, 196, 211, 215-16, Leeds, 76, 80, 129, 154, 179, 260, 278
251-3, 284-5; see also inventions, Leicester Square, 114
patents Levant, 17, 29, 88
Inspector-General's ledgers, 61-2 Company, 57
insurance, 17, 56, 61, 70-1, 85, 124, 183, Liebig, 215
185, 226, 274 limited liability, 124, 180
international economy, 53-71, 134, Lincolnshire, 48
203-5, 214-15, 227-8, 294-5 linen, 88, 90, 92-3, 94, 101, 221, 225, 247
inventions, 88-91, 94, 100, 106, 116, 123, Liverpool, 15, 71, 76, 80, 84, 95, 102, 130,
125, 135-41, 181, 253, 281 154, 170, 172-3, 195, 215, 233, 234,
Inveraray, 109 235, 236, 260, 277, 278
' invisible hand', doctrine of the, 220, 225, Liverpool, Lord, 230
228, 232 Liverpool-Manchester railway, 172-3
Ireland, 14, 59, 152, 154, 211, 213 Lloyds, 124, 288
iron industry, 15, 19, 50, 69, 79, 81, 87, London, 14, 15, 17, 29, 32, 55, 59, 60, 71,
103-18, 121, 125-6, 129,134, 137-9, 74> 75, 76> 79,82,83, 84,85, 105, 112,
141, 169, 177, 179, 181, 273, 281, 114, 126, 127, 129, 130, 133, 180,
285, 287, 293 181, 185-6, 187, 188, 194, 195, 197,
iron-framed buildings, 114, 116 220, 236, 260, 262, 263, 277, 278,
286, 287
Jacquard loom, 125 London and Birmingham railway, 173
Johnson, Dr, 123 London and Southampton railway, 173
joint-stock companies, 56, 124, 180-1, long waves (or long swings), see Kondra-
194, 196-8, 201, 222, 226; see also tieff cycles
chartered companies Louis XIV, 183
Juglar cycles, 252 Luddite riots, 161
Justices of the Peace, 161, 162, 220, 226,
229 Macadam, 75
machine-breaking, 161
Kay, John, 88, 136 machine-tools, 139
Kennedy, John, 97, 254 machinery, 39-41, 51-2, 89-91, 93, 94,
Kent, 107, 154 95, 97-8, 99-102, 109, 111-13, 114,
Kondratieff cycles, 250-2 115-16, 126, 127, 136, 137-9, 140,
143-4, 146, 148, 156, 168-9, 17°~1>
Labour 210, 274, 286, 287, 292-3; see also
child, 14,26,89,93,97, 100, 101, 145-6, machine-breaking
!
47> X55~6, 222, 232; see also malaria, 29
apprenticeship malt industry, 247
role of, 15-17, 35, 40, 45, 50, 52, 73-4, Malton, 282
93, 96-7, 100-1, 103, 127, 142-64, Manchester, 15, 71, 76, 78, 79, 88, 91,
212-14, 227, 255-7, 261-3, 265, 129, 154, 173, 211, 222, 254, 260
267-9, 270-1, 273-5 marriage, age of, 21, 25, 26, 27-8, 35
see also hours of work, wages, Marshall, 179
specialization maternal mortality, see mortality
laissez-faire, 201, 212-13, 220, 225-8, 'maturity', stage of, 272
232-3, 235, 237 Maudsley, Henry, 139
312 SUBJECT INDEX
maximum-hours legislation, 97, 287-8; see North, South or Central America, see
also hours of work America
meat, 30, 39, 268, 277 North Western Railway, 174
mechanical engineering, 113 Northumberland, 262
Medical Officers of Health, 146, 234, 236 Norwich, 15, 129, 220
medical progress, see health, standards of Nottingham, 27, 129
Metcalf, John, 74-5, 125
Mexico, 9 occupation, census of, 13-14, 273-6, 284
middle class, 212-13, 217-18, 236, 241, see also labour
254, 257, 282, 283, 284-5 official trade values, 60, 62-5
Midlands, 48, 112, 173 open-field system, 37-8, 40,42,43,44, 124
migration, 36, 153-4, 155, 215, 232, 233, opium, 225
278, 289, 292 overseas trade
milk, 39, 268, 277 growth of, 26, 53-71, 121-2, 134-5,
Mint, 184, 186, 194 192, 204, 206, 228, 249-50, 277, 294;
monetary policy, 189-202 see also smuggling
money statistics, 2-3, 58, 61-5, 67-9, 121-2
changes in value of, 8, 32, 263-7; see also Owen, Robert, 163, 179
deflation, inflation, price indices Oxford Canal, 81
supply of, see banks, role of Oxfordshire, 262
mortality
child or infant, 24, 26, 27, 145, 149, 155,
pack-horse, 73
255, 260-1 Palmer, Horsley, 201
maternal, 30; see also death rates Paris, 59, 193
mortgage loans, 226 parish registers, 23-4, 26, 28
Municipal Corporation Act of 1835, 235 Passenger Act of 1803, 232
patents, 89-90, 108, i n , 135-6
nabobs, 178 Paul, Lewis, 89
nail-making, 14 paupers, 7, 16, 93
Napoleonic Wars, 44, 45, 91, 92, 114, 124, pedlars, 274, 276
148, 153, 177, 180, 194, 208, 229-30, Peel, Robert, 204-5, 212, 213, 217, 226,
232, 258, 259, 263, 264, 265; see also 227, 230, 231, 283
French wars peerage, demography of, 28
Nasmyth, James, 283 Pelham, 184
National Debt, 174, 176, 180, 184-5, 2O2> Peninsular War, 161
229 People's Charter, 212
national income Perkin, W. H., 293
definition of,, 5 Peterloo, 265
levels of, 5-9, 67, 166, 258-9, 270, pin-making, 16
289-90, 294; see also economic growth Pitt, William, the Younger, 8, 51, 222,
structure of, 6-7, 16, 91, 205-6, 217, 224, 229
292 plague, 28-9, 40-1
natural increase, rate of, 20-36; see also plough, 37-8
population, growth of police force, 160, 224, 228
Navigation Acts or Laws, 59, 79, 204, 227 Poor Laws, 10, 13, 33, 151-3, 210, 231-4;
Navy, Royal, 56-7, 213, 235 see also Speenhamland, Law of
New World, 60, 138; see also America Settlement
Newcastle, 75, 76, 77, 133 Board, 234
Nielsen, 113 Commissioners, 151-2, 231, 233-4
Nigeria, 9, 16 Removal Act, 153
nonconformity, 23 rates, 46, 211
non-participant investors, 82-3, 173, population, growth of, 11-13, 19, 20, 36,
180-2, 202 50, 94-5, 121, 133, 145, 152-5,
Norfolk, 220 238-40, 255-6, 277-9, 289-90
SUBJECT INDEX
Portland cement, 126 Russell, Lord John, 212

Portsmouth, 139
Portugal, 161 sailing ships, 67, 170
potato, 32, 154, 213 sanitation, 30, 236, 261
potteries, 129 Sankey Brook, 79
poverty, 5-11, 148-9, 151 —3, 285-6; see savings banks, 175
also paupers, Poor Law scientific technology, 78
power Scotland, 61, 107, 109, 113, 152, 169, 187,
steam, 41, 51, 90, 91, 97, 98, 99, 101, 223
104, 105, 109, 111, 112, 115, 117, sea transport, 7 7 8 , 85, 116, 169-70, 227;
118, 126 7, 130, 137-9, H1* !4-6> see also sailing ships, steamships
155-6, 169, 170, 171-2, 293 seasonal fluctuations in economic activity,
water,9O, 91,95,115,126, 137, 146, 155 243
wind, 137 Secret Committee on Commercial Dis-
power-loom, 91, 97, 99, 101, 136, 169, tress, 235
286, 292 seed drill, 38
pre-industrial economy, characteristics of, Settlement, 1662 Law of, 13, 153
4 5 , 12, 20, 29 30, 53, 122, 133-4, Seven Years War, 31, 50, 134, 245
14950, 157-8, 242, 243 sewers, see sanitation
price indices, 8-9, 32, 62 4, 238 9, 263-6 sewing machine, 293
Prince Consort, 278, 280 Sheffield, 69, 75, 154, 220
Privy Council, 234 shipping, see sea transport, sailing ships,
productivity, 12-13, 18, 36, 39, 63, 96, steamships
271, 285-6 shops, retail, 275 6
profits, 35, 56, 70, 95, 97, 99, 117, 130, Shropshire, 18
132, 144, 159, 176-7, 179-80, 210, silk industry, 92, 94, 129
217, 257 silver, 185, 186, 195
proletariat, 16-17, 14&~7i H * ^ 0 * J 56-7, Simon, Sir J., 234
160, 254, 256-7, 273; see also working smallpox, 30
class Smithfield market, 268
Public Health Act, 234 smuggling, 204, 223-4, 228, 268
puddling, n o , 112, 137-8, 169 Society of the Promotion of Christian
Knowledge, 279
Quakers, 173 Solar cycles, 246
Queen Victoria, see Victoria South America, see America
South Sea Bubble, 245
Railway Acts of 1840 and 1842, 234-5 specialization of labour, 15-17, 88,
railway inspectors, 235 129-30, 146, 157 8, 253-4, 273-6
railways, 72, 82, 86, 114, 117, 121, 140, Speenhamland system, 26, 151 - 3 , 231,
154, 169, 171-4, 176, 180-2, 202, 266
211, 234 5, 277, 292 spinning-jenny, 89-91, 93, 94, 96, 99, 136,
rats, 28-9 178, 262
reciprocity, principle of, 204 Staffordshire, 18, 112, 263
re-exports, see overseas trade and entrepot standards of living, 5-9, 24, 31, 34-5, 42,
trade 45, 81, 150-4* 209, 241-2, 254,
Reform Act of 1832, 162, 218 255-7!> 273, 285-9
regional variartions in economic condi- statute labour, 73-4
tions, 1718, 32, 38, 262-3 steam
roads, 72, 73-6, 82, 85, 100, 125, 277 engine, 98, 104, 105, 109, i n , 118,
Robinson, 227 126-7, 137-9
Rose's Act, 175 hammer, 112
Rothschild, Nathan, 202 locomotive, 171
Royal Agriculture Society, 211, 216 power, see power, steam
Runcorn, 80 ship, 154-5, 170, 277
SUBJECT INDEX
steel, 108, i n , 118, 169 156, 162, 166, 211, 215, 260-1, 278,
Stephenson, George, 172 283
Stock Exchange, 183 Usury Laws, 176, 220, 223, 224, 226
stocking frame, 129
Stockton-Darlington railway, 171-2 vaccination, 30
strikes, 227 Victoria, Queen, 208
Strutt, 156, 179, 283
Stubs, Peter, 15 wages, 12, 16, 17, 100, 132,147-52, 162-4,
sub-contracting, 162 176, 209, 210, 227, 261-71
subsistence sector, 16, 38, 147, 149, 158 Wages Fund doctrine, 231
sugar refining industry, 79, 130 Wales, 110, 112, 113
Sunday School Movement, 279 Walpole, 184
sunspot cycles, 246 war, effects of, 60, 67, 68-9, 114, 122,
superphosphate of lime, 193-4 190-4, 208, 247-8, 253, 264-5; see
also references to specific wars
'take-off', 3-4, 35, 37, 61, 87, 105-6, water-frame, 90, 95, 96, 111, 136
120-2, 166 Waterloo, 44, 46, 50, 96, 194, 209, 213,
tea, 64, 150, 224, 267 217, 265
technological progress, see innovations, Watt, James, 90, 104, 109, 137-8, 179,
inventions, patents 293
Telford, 75 Wedgwood, Josiah, 80
Ten Hours Act of 1847, 287 Wellington, Duke of, 161
thin-walled iron casting, 108 West Indies, 54-5, 58, 88, 95
threshing machine, 39, 50 West Riding, 221
Tithe Commutation Act, 211 Weymouth, 172
tobacco, 53, 150, 267, 268 Whitney, Eli, 66, 91
Tolpuddle labourers, 163 Wilkinson, John, 48, 51, 109, 112, 179,
towns, see urbanization 195
Townshend, Turnip, 40 William of Orange, 183
trade cycles, 238-54 Williams, Thomas, 195
trade unions, 160-4, 2 2 7 Wolverhampton, 222
traditional society, 18; see also pre- wood, 104, 116, 136-7
industrial economy Wood brothers, n o
transport, 72-86; see also railways, roads, woollen industry, 14, 18,54,55,61,65,69,
steamships 88, 92, 125, 169, 224, 225
Treasury, 184, 207 working class, 152, 159-64, 175-6, 207-8,
Tull, Jethro, 38 212, 214, 258, 265-71, 288-9; see also
turnip, 39, 40 proletariat
turnpikes, 74-5, 84, 85, 176 World War I, 294
Tyburn, 123 Worsley tunnel, 79
typhoid, 278 worsted industry, 125, 169
unemployment, 101, 144, 153, 160, 265, Yarmouth, 77
267, 286 Yeovil, 172
United States, see America York, 23, 75
urbanization, 14-15, 16, 32, 46, 49, 70-1, Yorkshire, 112, 127, 154, 262
woollen industry, 18, 125, 224, 225
INDEX OF AUTHORS CITED
Albert, W., 74, 300 Chambers, J. D., 27, 37, 46, 147, 297, 298,
Alexander, D., 276 299, 302, 307
Alexander, R. M., 297 Chapman, S. D., 300, 302
Anderson, James, 33 Chapman, S.J., 179, 300
Ash ton, T. S., 3, 15, 43, 44, 59, 62, 63,
Clapham, J. H., 43, 77, 79, 80, 84, 99,
103, 112-13, 195, 221, 222, 243, 114, 119, 147, 173, 186, 193, 234,
247-8, 256, 266. 296, 297, 299, 301, 256, 266, 272, 274, 277, 286, 288,
302, 305 293, 296, 304
Clark, G. Kitson, 212 13, 281-2, 283,
Bagehot, W., 282 3°4> 3°7
Bagwell, P., 300 Clark, G. N., 299
Baines, E., 300 Clark, P., 297
Bannister, T., 101 Clow, A. and N. L., 297
Barker, T. S., 296 Coats, A. W., 148, 302
Barnes, D. G., 207, 304 Cobbett, William, 153
Barnett, George, 298 Cole, G. D. H., 304
Beeke, Rev. H., 167 Cole, W. A., 299, 302
Bernal, J. D., 301 Coleman, D. C , 297, 301
Berrill, K. E., 67, 299 Collier, F., 300, 302
Beveridge, Sir W., 246, 248, 305 Collins, E. J. T., 39, 299
Blaug, M., 152-3, 231, 300, 302 Colquhoun, P., 16, 134, 168
Bowley, A. L., 262, 265, 267 Cooney, E. W., 305
Brady, Alexander, 205, 304 Court, W. H. B., 297
Brebner, J. Bartlett, 233, 305 Crafts, N. F. R., 34, 239
Bridges, Sir E., 274 Cramp, A. B., 303
Briggs, A., 3, 81, 229, 265, 297, 302, Crouzet, F., 167, 171, 178, 303
Crump, W. B., 297
Brown, E. H. Phelps, 12, 32, 151, 267,
286, 297, 306 Daniels, G. W., 300
Brown, Lucy, 231, 304 Davis, Ralph, 54, 300
Brown, M., 296 Derry, T. K., 139, 301
Brown, R. G., 298 Dickinson, H. W., 301
Brownlee, J., 11, 260 Dickson, P. G. M., 185
Burn, W. L., 307 Dodd, A. H., 297
Bythell, Duncan, 262, 300 Drummond, J., 42, 299
Dubois, A. B., 303
Caird, J., 124, 301
Cairncross, A. K., 305 Eagley, R. V., 304
Campbell, R. H., i n , 178, 301, 303 Edwards, M. M., 300
Cardwell, D. S. L., 127, 293, 307 Ellison, Thomas, 300
Chaloner, T. E., 301 Engels, F., 241-2, 256-7, 306
Chaloner, W. G., 51, 299 Erichsen, J. W., 30
315
316 I N D E X OF A U T H O R S CITED
Erickson, Charlotte, 284, 307 Hopkins, Sheila V., 306

Ernie, Lord, 44,48, 209, 211,215,216,299 Hoselitz, B. F., 303
Evans, G. H., 303 Hoskins, W. G., 48, 299
Eversley, D., 133, 298 Houghton, W. E., 281, 307
Hunt, B. C , 303
Fairlie, S., 304 Hunt, H. G., 299
Farr, William, 34 Huxley, T. H., 281
Fay, C. R., 304 Hyde, C. K., 104, 108, n o , 112, 301
Feaveryear, A. E., 304
Feinstein, C. H., 166, 167, 303 Imlah, A. H., 166, 203, 225, 300, 304
Felix, D., 177, 303
Ferguson, T., 307 Jackman, W. T., 76, 81
Fetter, F. W., 304 Jefferys, James B., 276, 307
Fitton, R. I., 156, 302 Jenkins, Rhys, 301
Flinn, M. W., 33, 264, 296, 298, 301, 306 Jenks, L. H., 300, 303
Fussell, G. E., 40 Jevons, W. S., 245
John, A. H., 297
Gardiner, L., 75 Johnson, Dr, 123
Gayer, A. D., 249-50, 267, 305 Jones, E. L., 298, 299, 302
Gelderen, van, 250 Joslin, D. M., 304
George, M. D., 306
Giffen, R., 168, 256 Kerridge, E., 299
Gilboy, Elizabeth, 17, 302 Kindleberger, C. P., 71
Glass, D. V., 23, 298 King, Gregory, 5-8, 10, n , 13, 14, 16, 22,
Goldsmith, Oliver, 146 132, 134, 147, 151, 158, 166, 298
Gould, J. D., 305 Kondratieff, N. D., 250-1, 305
Gregory, T. E., 197, 304 Krause, J. T., 26
Grey, W. R., 288 Kuznets, S., 245
Habakkuk, H.J., 25, 27, 36, 121, 128, Lambert, Royston, 261, 306
269, 283, 289, 293, 297, 298, 301, 307 Landes, D. S., 296
Haber, L. F., 297 Laslett, P., 298
Hadfield, Charles, 80, 300 Lee, C. H., 301
Hall, A. R., 300, 301 Letiche, J. M., 300
Hamilton, E.J., 177, 297, 303 Lewis, J. Parry, 248, 254, 305
Hamilton, H., 297 Lewis, R. A., 261, 306
Hammersley, G., 104, 301 Lewis, W. A., 166, 298
Hammond, J. L. and B., 10, 256-7, 306 Lipson, E., 297
Harris, J. R., 296 Little, A. J., 240
Hart, J., 305
Hartwell, R. M., 256, 296, 306 McCord, N., 304
Hawtrey, R. G., 304 McCulloch, J., 256
Heaton, H., 297 MacDonagh, O., 236-7, 305
Hecksher, E., 148, 300 McKeown, T., 27, 30, 259, 298
Helleiner, K., 298 Malthus, T. R., 25-6, 152
Henderson, W. O., 239 Mandeville, Bernard de, 148
Hicks, J. R., 148, 170, 297 Mann, J. de L., 93, 97
Hills, R. L., 301 Mantoux, P., 2, 3, 151, 296
Hirst, L. Fabian, 29 Marshall, Dorothy, 11, 222, 298, 305
Hobsbawm, E. J., 161, 256, 259-60, 267, Marshall, J. D., 297, 305
269, 296, 306 Marshall, T. H., 34
Hoffmann, G. W., 3, 258 Marx, Karl, 146, 256
Hollingsworth, T. H., 28, 298 Massie, J., 8
Holmyard, E., 300 Mathias, P., 8, 296, 297, 298, 303
INDEX OF AUTHORS CITED 317
Matthews, R. C. O., 174, 305 Salaman, R. N., 299
Meister, J. M., 11 Sanderson, M., 280, 307
Mendels, F. F., 298 Saville, J., 302
Merlin, S. D., 245 Sayers, R. S., 195, 304
Mill, J. S., 245, 280, 286 Schofield, R. S., 280, 307
Minchinton, W. E., 300 Schubert, H. R., 301
Mingay, G. E., 37, 48, 298, 299 Schumpeter, E. B., 32, 62 3, 300
Mitchell, B. R., 11, 24, 136 Schumpeter, J. A., 87, 106, 119, 251-2,
Mitchell, W. C , 244-5, 306
Morgan, E. V., 200, 304 Schwartz, A. J., 249 50, 267, 305
Musson, A. E., 140, 302 Scrivenor, H., 301
Shapiro, S., 303
Namier, L., 282, 283 Shrewsbury, J. F., 29, 298
Nef, J., 2-4, 103, 120, 298 Silberling, N. J., 305
Nurkse, Ragnar, 40 Simmons, J., 300
Singer, C , 41, 300
O'Brien, P. K., 299 Singer, H., 13
Skempton, C., 78
Parker, R. A. C , 40, 299 Slack, P., 78
Payne, F. G., 41, 299 Slater, Gilbert, 45, 299
Pebrer, P., 168 Smart, W., 306
Pelling, H., 161 Smelser, N.J., 301
Perkin, H.J., 296 Smiles, S., 285
Petty, Sir William, 11 Smith, A., 10, 16, 19, 26, 58, 77, 91, 149,
Pinchbeck, I., 302 157, 203, 206-7, 219-20, 223, 240,
Pollard, S., 302, 303, 306 298
Porter, G., 307 Smith, V. K., 304
Postan, M., 178, 181, 303 Stewart, Sir James, 148
Pressnell, L. S., 188, 195, 296, 304 Stone, L., 307
Prouty, R., 305 Supple, B. A., 298
Swan, D., 300
Radcliffe, W., 90 Sykes, J., 297
Raistrick, A., 301
Ramsey, G. D., 60, 300 Tarn, J., 302
Raynes, H. E., 120 Taylor, A. J., 23, 256, 301, 305, 306
Razzell, P. E., 30 Thirsk,J., 48-9, 299
Reader, W., 123, 302 Thompson, A., 296
Record, R. G., 298 Thompson, E., 303, 304
Redford, A., 154, 300, 302 Thompson, F. M. L., 282, 307
Reed, Donald, 254 Thorp, W. L., 244 5, 306
Ricardo, David, 199, 209, 245 Tooke, T., 256
Rickman, John, 23-4 Toynbee, Arnold, 2, 228, 256
Riden, P., 301 Trow-Smith, R., 299
Roberts, D., 305
Robinson, E., 302 Tunzelmann, G. N. von, 138, 264, 302
Rodgers, H. B., 301
Roepke, H. G., 109, 114, 301 Usher, A. P., 302
Rose, R. B., 305
Rosenstein-Rodan, P., 9 Veverka, J., 305
Rostow, W. W., 3-4, 18, 35, 37,61,87,94,
105-6,114, 120-2, 166, 178, 249-50, Wadsworth, Alfred P., 97, 302
267, 272, 298, 305 Ward, J. R., 394
Rowe, J., 297 Ward,J. T., 306
Rude, G., 302 Webb, S. and B., 159, 256, 300, 303
Weber, B., 305
INDEX OF A U T H O R S CITED
West, E. G., 307 Woodham-Smith, C , 304

Wilbraham, A., 299 Woodruff, W., 306
Willan, T. S., 300 Woolf, Michael, 306, 307
Williams, J. E., 306 Wrigley, E. A., 28, 299, 302
Williams, Trevor, 300, 301
Wilson, Charles, 57, 123, 302 Young, Arthur, 11, 19, 41, 47, 148, 150,
Wood, G., 265, 267, 306 258, 262, 298

The First Industrial Revolution

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The First Industrial Revolution

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THE

© Cambridge University Press 1965, 1979

First published 1965

British Library Cataloguing in Publication data

ISBN o 521 22667 8 hard covers

Transferred to digital printing 2003

Preface to the first edition page vii

3 The agricultural revolution 37

In recent years economists and policy makers have become

My aim in revising this book has been to take account of the

THE STARTING POINT

It is now almost an axiom of the theory of economic development

social and occupational classes determined by ownership of or

of the characteristics of twentieth-century pre-industrial econo-

First, then, how poor were the people of eighteenth-century

5H,586 5* 2,675,520 67 0 34,495,800 12 18 12 0 0 18 0 2,447,100

849,000 3? 2,825,000 IO IO 9,010,000 3 3 3 76 46 622,000

So the General Account is

360.586 Neat Totalls 5,500,520 £32 o £43>5<>5,8oo £y 18 £ 7 1 1 3 £0 6 9 £1,825,100

economy at the time of the Glorious Revolution:1 it is repro-

contemporary newly developing countries the price rise was

figure exceeded 8 million gallons and consumption averaged

Another characteristic of a pre-industrial community which

eventually levelling out the original gain in incomes per head.

subsistence sector seems to have dwindled to minor importance

In sum, therefore, it is evident that the British economy of the

The beginnings of industrialization and growth and structural

Although there is still room for considerable differences of

lighters; neither were they always legible. Nevertheless, these

distinctly lower levels in the 1750's. Moreover there is no doubt

of labour, would enable the labourer to purchase with a day's

in a gradual improvement in standards of living and social

created industrial and commercial distress and unemployment.

to the vicissitudes of the poor, which was associated both with

because year-to-year changes in burials and baptisms are an

Professor Habakkuk has pointed out,' the elements are evidently

Students of economic growth in today's underdeveloped coun-

discontinuous strips by peasants with rights of pasture, fuel and

angular plough (patented in 1730), which permitted a rapid

the aggregate production of the agricultural industry from a

travelling carriage, kept his model farm at Windsor, formed his

there is no doubt that enclosure and the improvements which it made

uncertainty to calculable proportions and provided the strongest

One of the ways—the commonest way perhaps—by which an

—the crop or the skill that they happen to have in unusual

T A B L E 2. The geographical distribution of English trade in the

i700/1 1750/1 1772/3 1797/8

Total imports from:

white residents. But by the time the American War of Inde-

1772 onwards. Until quite recently students who wanted to use

commodities over the period considered, one would get an

breaks in trend which we have already detected in the output

One of the most significant differences between a pre-industrial

Goods, of course, moved much more slowly than passengers.

porting bulky, weighty, goods was by water and Britain scored

of the first section of the Birmingham canal, and by the end of

Asa Briggs, The Age of Improvement (1959), p. 30.

1815 capital authorized by Parliament for the London docks

of existing capital resources and to that extent might be

THE COTTON INDUSTRY

It is convenient to regard the first industrial revolution as

first introduced in the 1730's and began to be adopted widely

jenny'. These developments changed the whole character of the